Stocks shot up in afternoon trading on Wednesday as investors weighed comments from Jerome H. Powell, the Federal Reserve chairthat seemed to confirm expectations that the central bank could slow its interest rate increases soon.
“The time for moderating the pace of rate increases may come as soon as the December meeting,” Mr. Powell said during an event at the Brookings Institution.
The S&P 500 climbed more than 3 percent, after reversing a small decline before Mr. Powell’s prepared remarks were released. It was the index’s best day in over two weeks. The Nasdaq composite index, which is particularly sensitive to changing views on interest rates, rose 4.4 percent.
“The headline is that they are going to slow down the pace of rate hikes,” said Sonu Varghese, director of the investment platform at Carson Group. “Powell, I think, all but gave this away.”
Ever since the Fed’s last policy meeting in early November, investors have been focused on signs that the central bank is about to ease up slightly on its efforts to cool inflation with higher interest rates. Though interest rates are still expected to climb, futures markets show that traders expect Fed officials to raise rates half a point at their Dec. 14 meeting, a slower pace than the three-quarter-point increases at each of the past four meetings.
Higher interest rates are expected to slow the economy, and can hurt corporate profits and consumer spending. So, the easing up is good news for investors, and the S&P 500 jumped more than 5 percent in November. The benchmark index is still down about 14.4 percent since the beginning of the year.