Stocks opened higher and trended that way into the closing bell, as investors and traders enjoyed a relief rally on what was the most anticipated Fed Day since the last one. Technology and energy were among the top sectors, despite confirmation from monetary policymakers that economic uncertainty is a top concern.
During his post-meeting press conference, Federal Reserve Chair Jerome Powell acknowledged that new policies from President Donald Trump could have an impact on the economy but added that the central bank feels no rush to adjust its approach.
"We're at a place where we can cut or we can hold," Powell said. The Fed, as expected, left the federal funds rate target range unchanged at 4.25% to 4.50%. But the FOMC policy statement left little doubt that the big picture has grown cloudy.
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"Recent indicators suggest that economic activity has continued to expand at a solid pace," says the Federal Open Market Committee. Unemployment "has stabilized at a low level," suggesting "solid" labor market conditions. As for inflation, it "remains somewhat elevated."
And "uncertainty around the economic outlook has increased."
As ever, the FOMC will maintain attention "to the risks to both sides of its dual mandate," which is "to achieve maximum employment and inflation at the rate of 2 percent over the longer run."
The Fed's "dot plot" indicates members of the FOMC still see two rate cuts in 2025, both during the second half of the year.
The trajectory of the Fed's balance sheet was one of the many important questions investors, traders and speculators wanted answered this afternoon.
In another update to its statement, the FOMC said it will slow the pace of quantitative tightening in April. It will reduce the monthly redemption cap on Treasury securities from $25 billion to $5 billion but maintain the cap on agency debt and agency mortgage-backed securities at $35 billion.
After explaining its QT plan, the FOMC reiterated that it is "strongly committed to supporting maximum employment and returning inflation" to 2%.
We continue to follow the day's developments on our live Fed blog.
At the closing bell, the Dow Jones Industrial Average climbed 0.9% to 41,964, the S&P 500 added 1.1% to 5,675, and the Nasdaq Composite surged 1.4% to 17,750.
Google acquires Wiz
Alphabet (GOOGL, +2.0%) subsidiary Google announced on Tuesday that it will acquire cloud security company Wiz for $32 billion in cash.
According to Google, the "acquisition represents an investment by Google Cloud to accelerate two large and growing trends in the AI era: improved cloud security and the ability to use multiple clouds (multicloud)."
Susquehanna International Group analyst Shyam Patil said it positions Google Cloud "to join the mix of enterprises' multicloud approaches" and gives it "an additional selling point when going up against cloud competitors like AWS and Azure."
Patil also said the integration of Wiz "could potentially change the nature of GOOGL's relationships with close cybersecurity partners like Palo Alto Networks (PANW), which has its own cloud security offerings that compete directly with Wiz."
Patil rates GOOGL stock Positive (equivalent to Buy) with a 12-month target price of $225. Patil notes that "downside risk is $122."
The deal was announced the same day Oppenheimer analyst Chris Kotowski said there's "no visible sign of" a forecast dealmaking rebound in 2025, noting that announced M&A is up 2.4% year to date.
"Moreover," Kotowski writes, "we fear that the current uncertainty over tariffs, a fiscal 'detox' and the general upheaval of 80 years of trade and security arrangements is likely to cause a pause in M&A activity."
Nvidia gets its bounce
Nvidia (NVDA, +1.8%) saw the bounce on Fed Day that it didn't get from CEO Jensen Huang's keynote address at the GTC AI Conference.
Morgan Stanley Research analyst Joe Moore said Blackwell is off to an "incredible" start, with demand from the top four cloud service providers forecast to grow by more than two times year over year in 2025.
Moore notes that the keynote address is aimed at developers, not investors, but the strong Blackwell commentary, Huang's roadmap through 2027 and broader commentary all frame a positive investment picture.
Tesla finds a spark
Tesla (TSLA, +4.7%) got its own boost on Fed Day after powering down 4.8% on Monday and 5.3% on Tuesday.
Cantor Fitzgerald analyst Andres Sheppard upgraded the EV stock to Overweight (equivalent to Buy) from Neutral (equivalent to Hold), citing TSLA's 44% year-to-date decline through Tuesday on weaker sales and rising competition as well as concern about the impact of CEO Elon Musk's political work.
The analyst noted multiple potential catalysts for a rebound, including full self-driving technology in China and Europe this year, the launch of a robotaxi service in June and the introduction of a mass-market EV by the summer.
Sheppard maintained his 12-month price target at $425. TSLA closed at $235.86 on Wednesday.
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