US stocks rally as Fed holds rates, prompts hope for end to hikes

US stock market: Wall Street's major indexes closed higher on Wednesday with the Nasdaq's 1.6 per cent advance leading gains, after the US Federal Reserve kept interest rates unchanged and comments from its top official fueled investor optimism rate hikes were done even though the central bank left the door open for more.

Fed Chair Jerome Powell said policy makers would proceed carefully although they were not yet confident financial conditions were restrictive enough to get inflation as low as the central bank would like. Trading was choppy at the start of Powell's press conference but the major equity indexes started to regain lost ground after about 20 minutes, then went on to hit session highs.

This was because the Fed's top official "wasn't as assertive about higher-for-longer" rates as he has been in past press conferences, according to Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Charlie Ripley, senior investment strategist for Allianz Investment Management, wrote that while there is still a potential risk for the Fed to raise rates again, Powell's commentary suggests that "the bar has become higher for rate hikes."

Edward Moya, senior market analyst at Oanda wrote that while Powell insisted he was keeping options open for a hike "he didn’t seem very convincing." The Dow Jones Industrial Average (.DJI) rose 221.71 points, or 0.67 per cent, to 33,274.58, the S&P 500 (.SPX) gained 44.06 points, or 1.05 per cent, to 4,237.86 and the Nasdaq Composite (.IXIC) added 210.23 points, or 1.64 per cent, to 13,061.47.

Among the S&P 500's 11 major sectors only two lost ground with energy (.SPNY) falling 0.3 per cent while consumer staples (.SPLRCS) edged down 0.06 per cent. Top gainers were rate sensitive information technology (.SPLRCT), which rose 2 per cent and communications services (.SPLRCL), which rose 1.8 per cent.

In individual stocks, Shares of Advanced Micro Devices (AMD.O) jumped almost 10 per cent after an upbeat forecast for sales of chips for artificial intelligence signaled progress in its bid to catch up with market leader Nvidia (NVDA.O).

Earlier, the stock market was boosted from falling bond yields after the US Treasury Department said it will slow the pace of increases in its longer-dated debt auctions in the November-January quarter and expects it will need one more additional quarter of increases after this to meet its financing needs.

Earnings season has been a mixed bag for stocks even though 79.7 per cent of the 310 S&P 500 companies that had reported at the time of LSEG's latest update beat analyst expectations for the quarter while only 16.1 per cent had fallen short of estimates.

Still investors were disappointed by many quarterly updates. Estee Lauder (EL.N) shares tumbled 18.9 per cent after the beauty products maker cut its annual profit outlook. And shares in Payroll processor Paycom Software (PAYC.N) sank 38.5 per cent after it projected for downbeat fourth-quarter revenue.

Tinder owner Match Group (MTCH.O) dropped 15.3 per cent after it also forecast fourth-quarter revenue below estimates. Advancing issues outnumbered declining ones on the NYSE by a 2.36-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored advancers. The S&P 500 posted 7 new 52-week highs and 30 new lows; the Nasdaq Composite recorded 24 new highs and 297 new lows.Trading was brisk on US exchanges with 11.20 billion shares changing hands compared with the 10.67 billion average for the last 20 sessions.