"Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened," the Fed said in a statement, in which it also decided to leave interest rates near zero. The central bank also added that it is seeing signs of rising inflation, but the price increases are pandemic-related and should be transitory.
“Markets are buying into the fact rates are going to stay low,” said Michael Arone, chief investment strategist at State Street Global Advisors. Powell is “focused on inflation, which is transitory, and the labor market, which has a tremendous amount of slack and a long way to go. This idea that rates won’t accelerate quickly, I do think helps soften some of the concerns that accelerating interest rates were going to be a headwind for growth stocks. I guess that's good news for asset prices."
Investors also digested major technology earnings from Google-parent Alphabet, AMD and Microsoft. However, all eyes are on Apple and Facebook, which report after the closing bell Wednesday. Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC that the stock market may wait until some of these key reports are out before deciding on its next major direction.
