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US markets end sharply higher after Fed keeps rates unchanged

20 Mar 2025 Evaluate

The US markets closed sharply higher on Wednesday following the Federal Reserve's monetary policy announcement. While the Federal Reserve has left the interest rates unchanged amid concerns over rising inflation and possible impact of Trump’s tariffs, the projections signalled that central bank is still anticipating rate cut by half a percent by the end of 2025, which cheered positive sentiments across the markets. Meanwhile, Fed has lowered its projections for GDP growth in 2025 to 1.7 percent from 2.1 percent and raised their forecasts for consumer price growth this year to 2.7 percent from 2.5 percent. Traders also took note of Fed’s decision to slow the pace of reducing its securities holdings by cutting the monthly redemption cap on Treasury securities from $25 billion to $5 billion beginning in April.

On sectoral front, Airline stocks showed a strong move back to the upside after seeing significant weakness on Tuesday, with the NYSE Arca Airline Index soaring by 2.6 percent. Significant strength was also visible among brokerage stocks, as reflected by the 2.4 percent surge by the NYSE Arca Broker/Dealer Index. 

Dow Jones Industrial Average jumped 383.32 points or 0.92 percent to 41,964.63, Nasdaq surged 246.67 points or 1.41 percent to 17,750.79 and S&P 500 was up by 60.63 points or 1.08 percent to 5,675.29.

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