NEW YORK — U.S. stocks experienced a significant rally on Wednesday after the Federal Reserve signaled confidence in the economy's resilience, opting to maintain current interest rates. This positive sentiment was bolstered by a decline in bond market yields.

The S&P 500 leaped by 1.1%, while the Dow Jones Industrial Average surged by 383 points (0.9%), and the Nasdaq composite rose 1.4%, reflecting renewed investor optimism.

This rally came on the heels of weeks marked by volatile trading patterns, as uncertainty looms over President Donald Trump's economic policies, particularly regarding his commitment to revive manufacturing in the U.S. and reduce the federal workforce. His aggressive stance on tariffs and trade has generated concern that businesses and consumers may pull back on spending, exacerbating economic tensions.

During a press conference, Fed Chair Jerome Powell acknowledged a growing sense of pessimism among consumers and businesses reflected in recent surveys. However, he pointed to indicators of economic strength, including a stable unemployment rate. "It's possible to have periods where people express concerns about the economy but still go out and make major purchases," Powell noted.

The Federal Reserve has largely stabilized interest rates this year following substantial cuts in the previous year. Lower rates can stimulate economic activity; however, they also risk fueling inflation, which remains a delicate balancing act for the central bank. While Fed officials still anticipate two rate cuts by the end of this year, a cautious outlook prevails due to signs of weaker growth and rising inflation.

Addressing concerns around "stagflation"—a condition where the economy stagnates while inflation continues to rise—Powell was reassuring, stating, "I wouldn’t say we’re in a situation that’s remotely comparable to what we saw in the 1970s."

Additionally, Wall Street welcomed the easing of Treasury yields. The yield on the 10-year Treasury bond fell to 4.24%, down from 4.31% before the Federal Reserve's announcement, encouraging more substantial investments in stocks.

In corporate news, Nvidia played a critical role in propelling the market upward, rising 1.8% as it clarified its growth strategy amidst fears of slowed demand for artificial intelligence-related computing power. Tesla also saw a rebound, increasing by 4.7% after experiencing recent losses. However, it remains down 41.6% for the year thus far.

Conversely, General Mills suffered a setback, with shares dropping 2.1% despite exceeding profit expectations for the latest quarterly results. Revenue projections were lowered, citing a slowdown in snack sales and ongoing macroeconomic uncertainties impacting customer behavior.

Ultimately, the S&P 500 closed up 60.63 points at 5,675.29, the Dow increased by 383.32 points to 41,964.63, and the Nasdaq composite climbed 246.67 points to 17,750.79.

Meanwhile, in international markets, Japan's Nikkei 225 dipped by 0.2% following the Bank of Japan's decision to hold steady on interest rates. Notably, Japan reported a trade surplus for February, fuelled by more than an 11% rise in exports as manufacturers hurried to adjust to new tariffs.

As market dynamics continue to unfold, investors remain focused on how these complex economic factors will shape future trading strategies.