NEW YORK – U.S. stock markets surged to record highs on Tuesday as Federal Reserve Chair Jerome Powell signaled the central bank is likely to maintain its pause on interest rate adjustments, citing stabilizing inflation and sustained economic growth.
The S&P 500 climbed 1.8%, closing at 5,847 points, while the Dow Jones Industrial Average jumped 425 points to reach 38,962. The tech-heavy Nasdaq Composite led gains with a 2.3% increase, driven by strong performances from major technology companies.
Speaking at a monetary policy conference in Washington, Powell indicated that recent economic data supports the Fed’s current stance. “We’re seeing a balanced approach to our dual mandate,” Powell stated. “Inflation has moderated significantly while employment remains robust, giving us room to maintain steady rates.”
The announcement comes as the Consumer Price Index showed a 2.4% annual increase in September, down from 2.6% in August, moving closer to the Fed’s 2% target. Meanwhile, unemployment remained at 3.8%, reflecting continued strength in the labor market.
Investors responded enthusiastically, with particular strength in interest-rate-sensitive sectors. Financial stocks gained 2.1%, with major banks JPMorgan Chase and Bank of America posting notable advances. Technology giants Apple, Microsoft, and Alphabet also saw significant gains, contributing to the broader market rally.
“The Fed’s dovish tone is exactly what markets needed to hear,” said Jennifer Rodriguez, chief investment strategist at Wellington Capital. “With rate hikes off the table, we’re likely to see continued momentum in equities, particularly in growth-oriented sectors.”
The bond market reflected similar optimism, with the yield on 10-year Treasury notes declining to 4.23% from 4.38% the previous week. Lower yields typically boost stock valuations by making equities more attractive relative to fixed-income investments.
Economists project the Fed will maintain current interest rates through the first quarter of 2026, barring unexpected economic shocks. The central bank’s next policy meeting is scheduled for November 6-7.
Corporate earnings season is also supporting market gains, with 78% of S&P 500 companies that have reported third-quarter results beating analyst expectations. Aggregate earnings growth is tracking at 8.2% year-over-year, according to FactSet Research.
International markets followed Wall Street’s lead, with European indices posting modest gains and Asian markets opening higher in Tuesday trading. The dollar weakened slightly against major currencies, declining 0.6% against the euro.
Looking ahead, market participants will be monitoring upcoming economic data releases, including Friday’s jobs report and next week’s retail sales figures, for further confirmation of economic resilience and continued policy stability from the Federal Reserve.
