Stocks Roar to All-Time Highs After Fed Remarks on Rate Cuts

Stocks rallied to more records Wednesday after the Federal Reserve indicated it's still likely to deliver the cuts to interest rates this year that Wall Street craves.

• The S&P jumped 46.11 points, or 0.9%, to 5,224.62 and set an all-time high for a second straight day.
• The Dow Jones Industrial Average jumped 401.37, or 1%, to an all-time 39,512.13.
• The Nasdaq composite roared 202.62 points higher, or 1.3%, to an all-time high of 16,369.41.

The fear coming into the day was that the Fed would trim the number of expected rate cuts this year because of some hot inflation data, but it's still penciling in three. Traders built bets that the first cut will come in June.

Fed Chair Jerome Powell said he noticed the last two months' worse-than-expected reports, but they "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road towards 2%. That story hasn't changed." Powell said again that the Fed's next move is likely to be a cut sometime this year but that it needs additional confirmation inflation is moving sustainably down towards its target of 2%. It has little room for error, the AP reports. Cutting rates too early risks allowing inflation to reaccelerate, but cutting rates too late could lead to widespread job losses and recession.

"I don't think we really know whether this is a bump on the road or something more; we'll have to find out," Powell said about January and February's inflation data. "In the meantime, the economy is strong, the labor market is strong, inflation has come way down, and that gives us the ability to approach this question carefully." Fed officials upgraded their forecasts for the U.S. economy's growth this year, while also indicating they may end up keeping its main interest rate higher in 2025 and 2026 than earlier thought.

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On Wall Street, Mexican food chain Chipotle rose 3.5% after announcing its first stock split in history, a move that would lower the price of each share and make it accessible for more investors. (More stock market stories.)