Stocks hit session highs after Fed raises rates and upgrades economic outlook

Fed's 2019 outlook is what matters to the markets: Oppenheimer CIO
Fed's 2019 outlook is what matters to the markets: Oppenheimer CIO   

U.S. stocks jumped on Wednesday after the Federal Reserve raised interest rates and upgraded its outlook for the economy.

raised rates, as was widely expected. But the central bank also hiked its economic forecast

The Dow Jones industrial average briefly traded 250 points higher before holding about 175 points higher. The S&P 500 gained 0.5 percent, with energy rising nearly 3 percent. Financials also jumped to trade 0.8 percent higher. The Nasdaq composite advanced 0.4 percent, supported by a 1.7 percent bounce in Facebook. The S&P 500 and Nasdaq rose as much as 0.8 percent and 0.6 percent, respectively, after the Fed's announcement.

The Fed raised overnight rates by 25 basis points, in line with market expectations. Central bank officials also raised their GDP forecast.

"The economic outlook has strengthened in recent months," the committee said in its post-meeting statement, a sentence that had not been in previous releases. "Job gains have been strong in recent months, and the unemployment rate has stayed low."

Traders work on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters
Traders work on the floor of the New York Stock Exchange.

Fed officials also released their projections for the federal funds rate, which remained unchanged for 2018. The central bank, however, raised its 2019 forecast, saying it sees the benchmark rate at 2.9 percent, up from a 2.7 percent projection released in December.

Wall Street will also zero in on Chair Powell's first news conference in the position at 2:30 p.m. ET.

"Anything is possible in Powell's press conference but I'm inclined to think he wants it to be as boring as possible because why talk about a 4th hike when he is just initiating his first," said Peter Boockvar, chief investment officer at Bleakley Financial Group, in a note.

Treasury yields rose slightly after the Fed announcement and ahead of Powell's news conference. The benchmark 10-year yield traded at 2.914 percent.

Bank stocks also rose following the statement's release. The SPDR S&P exchange-traded fund (KBE) traded 0.9 percent higher, while shares of Citigroup, J.P. Morgan Chase and Wells Fargo all rising more than 1 percent.

In corporate news, Facebook shares bounced off the week's lows with a 2 percent gain as some top investors said the recent sell-off reflects a temporary issue. The bounce came after investor Bill Miller told CNBC's Scott Wapner that the stock's valuation is "too cheap."

The social media giant faces an investor lawsuit after reports emerged alleging that Cambridge Analytica, an analytics company, had gathered data from 50 million Facebook profiles without the permission of its users.

General Mills, meanwhile, fell nearly 10 percent after the company trimmed its adjusted earnings growth forecast.

Equities have been under pressure recently as the Trump administration ramps up a protectionist trade agenda. CNBC reported earlier on Wednesday, citing sources, that the White House will announce tariffs cracking down on Chinese theft of intellectual property.

—CNBC's Jeff Cox contributed to this report.