U.S. stocks rallied, posting their biggest one-day gain since 2020, after Federal Reserve Chairman Jerome Powell quashed investor fears that the central bank could consider bigger rate hikes of interest in the coming months.

Major indexes were initially little changed on Wednesday after the Fed announced it would hike interest rates by half a percentage point and begin trimming its $9 trillion asset portfolio next month. . Investors were widely expecting both moves as the conclusion of the central bank’s policy meeting neared.

What surprised some was that Powell said the Fed was not actively considering raising interest rates by 0.75 percentage points at an upcoming meeting. Fed funds futures, which traders use to track interest rate expectations, had previously shown market prices had a 95% chance that the Fed would make such a move in June.

Shares soared after Mr Powell’s remarks, with the Dow Jones Industrial Average ending up 932.27 points, or 2.8%, at 34,061.06, marking its biggest one-day gain since November 2020 The S&P 500 jumped 124.69 points, or 3%, to 4,300.17. for its best day since May 2020, while the Nasdaq Composite added 401.10 points, or 3.2%, to 12,964.86.

All three indexes had fallen earlier in the day.

“There’s a sense of relief,” said Christopher Smart, chief global strategist and director of the Barings Investment Institute.

With stocks and bonds on shaky ground lately, many investors feared the pace at which the Fed is tightening monetary policy could cause markets to stumble. Others have grappled with fears that the central bank, which is rapidly raising rates in an attempt to rein in inflation, could inadvertently tip the economy into recession.

The Fed’s messages, however, helped ease investor anxiety, according to Smart.