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By 14:53 ET (19:53 GMT), the Dow Jones Industrial Average was up 385 points, while the S&P 500 was up 1.2%, and NASDAQ Composite jumped 1.2%.
The Federal Reserve kept interest rates steady on Wednesday for the third straight meeting, and signaled that inflation is expected to cool faster than initially anticipated, setting up potential cuts next year.
Fed members estimated that the benchmark rate will fall to 4.6% next year, suggesting three rate cuts in 2024, from a prior projection of 5.1%, or two rate cuts.
About 60% of traders expect the Fed to cut as soon as March, compared with about 40% a day earlier, according Investing.com’s Fed Rate Monitor Tool.
Treasury yields fell sharply following the decision, with the yield on the two-year Treasury falling 29 basis points to 4.445% and 18 basis points to 4.035%.
The November producer prices were unexpectedly unchanged in November as a decline in the cost of energy products more than offset higher food prices, confirming that the country remained on a disinflationary path.
Signs of ongoing disinflation come just a day after the November consumer prices continued to show slowing price pressures.
In corporate news, Pfizer (NYSE:PFE) stock slumped over 7% after the drugmaker forecast 2024 sales substantially below previous expectations due mostly to declining demand for COVID vaccines and treatment.
Southwest Airlines (NYSE:LUV) stock fell 4% after the low cost carrier raised its forecast for fourth-quarter fuel costs, while Tesla (NASDAQ:TSLA) cut losses to trade nearly 1% after the electric vehicle manufacturer announced it was recalling just over two million vehicles in the United States fitted with its Autopilot advanced driver-assistance system to install new safeguards.
Oil prices settled higher Wednesday, after data showed U.S crude inventories fell by much more than expected last week.
The Energy Information Administration reported Wednesday that U.S. oil inventories fell by 4.3M barrels in the week ended Dec. 8, compared with expectations for a decline of 650,000 barrels.
But the potential draw arrived on the heels of several consecutive weeks of strong builds, keeping upside momentum in check.
(Peter Nurse contributed to this report.)
