• US stocks rose as investors digested the Fed's latest policy meeting.
  • Central bankers chose to keep interest rates steady, and Powell said a rate hike was "unlikely."
  • Markets had become jittery about the potential for even higher rates as inflation remains high. 

US stocks were mixed Wednesday as the Federal Reserve calmed the market's fears over a potential rate hike at the conclusion of its latest policy meeting.

After an initial burst of enthusiasm that saw the Dow jump by about 500 points, stocks gave back most gains, with the S&P 500 and the Nasdaq Composite ending lower for the day. 

Fed officials chose to keep interest rates unchanged, in line with the market's expectations. Central bankers don't expect to cut rates until they have greater confidence inflation is moving closer to the Fed's 2% price target, according to a Fed statement released Wednesday afternoon. 

In prepared remarks, Powell noted that high prices have eased "substantially" in the economy, while the job market has continued to hold up.

"But inflation is still too high. Further progress in bringing it down is not assured, and the path forward is uncertain," he added, though he noted the Fed's next rate move was "unlikely" to be an increase in interest rates. 

Investors have been fretting over higher interest rates as inflation came in hotter-than-expected throughout the first quarter. Markets are now pricing in a 67% chance the Fed will only cut rates once or twice in 2024, according to the CME FedWatch tool. The odds of a Fed rate hike in June are less than 1%. 

"Until we see renewed evidence that inflation is consistently easing, we're no closer to the Fed cutting rates," Greg McBride, the chief financial analyst at Bankrate said in a note. "The Fed statement made special mention of the fact that there has been a noticeable lack of progress in the past few months toward the goal of 2 percent inflation. Calling that out in the first paragraph is tantamount to saying that interest rate cuts are not coming soon."

However, the Fed announced it will ease its pace of quantitative tightening, which could loosen financial conditions by boosting liquidity it financial markets. The central bank is slowing its pace of balance sheet reductions to $25 billion a month starting in June, down from $60 billion a month.

"In continuation with the wait-and-see policy that has been in place, Chairman Powell is buying some time by diverting attention of this meeting towards the Fed's balance sheet and focusing on reducing the runoff pace of their Treasury holdings," Charlie Ripley, a senior investment strategist at Allianz Investment Management, said in a note.

"Ultimately, today's policy decision was a well-rounded approach to give the Fed more time to gain confidence in the path of inflation," he added.

Here's where US indexes stood at the 4 p.m. closing bell on Wednesday: 

Here's what else is going on: 

In commodities, bonds, and crypto: 

  • West Texas Intermediate crude oil slid 3.23% to $79.28 a barrel. Brent crude, the international benchmark, ticked higher 0.17% to $83.58 a barrel. 
  • Gold rose 1.64% to $2,323.29 an ounce. 
  • The 10-year Treasury yield dropped 6 basis points to 4.62%. 
  • Bitcoin slipped 2.3% to $58,551. 
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