Markets News: Stocks Close Higher as Fed Holds Key Rate Steady Amid Economic Uncertainty

By Stephen Wisnefski
Executive Editor at Investopedia
Published: March 19, 2025, 06:30 PM EDT

In a notable market rally, stocks closed higher on Wednesday following the Federal Reserve’s decision to maintain its key interest rate, providing a glimmer of optimism amidst rising economic uncertainty. The Dow Jones Industrial Average rose by 0.9%, the S&P 500 gained 1.1%, and the Nasdaq Composite increased by 1.4%. This uptick in stock performance marks a turnaround for investors after a challenging stretch, with stocks having slipped in four consecutive weeks prior to this week.

Federal Reserve’s Insights on Economic Outlook

The Fed concluded a two-day policy meeting and affirmed its stance on rates with a statement highlighting that while "economic activity has continued to expand at a solid pace," there is "increased uncertainty around the economic outlook." This acknowledgment comes amid concerns about the potential effects of tariffs and overall economic growth linked to the policies of the Trump administration, which have caused unease among investors.

The Fed’s quarterly Summary of Economic Projections indicated a reduction in growth expectations for the year while projecting an uptick in inflation. Officials anticipate that two interest rate cuts could happen within the year, suggesting a cautious yet proactive approach to economic challenges. Fed Chair Jerome Powell emphasized that the central bank is prepared to adapt as necessary but is not in a rush to change rates without clearer insights into future economic conditions inflamed by policy changes.

Key Market Movers: Boeing and Tesla Steal the Show

Boeing emerged as a leading performer on Wednesday, witnessing a remarkable increase of nearly 7%. The aerospace giant secured a deal to sell 17 of its 737-8 aircraft to Japan Airlines, leading to positive investor sentiment. CFO Brian West highlighted improved cash flow during a conference, further bolstering market confidence.

Tesla also made headlines, with shares up nearly 5% as the electric vehicle manufacturer looks to recover after experiencing a substantial decline in market value over the past few months. Other key technology stocks also performed well; Apple, Microsoft, and Amazon all saw increases, contributing to a cautious recovery in the technology sector following a period of volatility.

Noteworthy gains were also seen in AI-centric companies, such as Super Micro Computer and AppLovin, which each rose around 6% after experiencing previous losses. Conversely, shares of Intel fell 7%, as the company grappled with leadership changes and investor reactions to its strategic shifts.

Treasury Yields and Commodities Also Reflect Economic Sentiment

In the bond market, the yield on the 10-year Treasury note settled at 4.25%, down slightly after reaching an intraday high of 4.32%. This decline in yields suggests increased investor appetite for safer assets amid growing economic unease.

On the commodities front, gold futures increased by 0.6% to $3,060 an ounce, approaching record highs, while West Texas Intermediate oil saw a modest rise of 0.4% to $67.20 per barrel, showcasing the ongoing fluctuations in energy markets.

Summary of Notable Stock Movements

On this day of slight recovery, here are some of the significant movers in the S&P 500:

Advancers:

• Boeing (BA): +6.8% after announcing a new order from Japan Airlines.
• Caesars Entertainment (CZR): +5.7% following board appointments.
• Super Micro Computer (SMCI): +5.8% with new AI product launches driving interest.

Decliners:

• Intel (INTC): -6.9% as the stock faltered following recent leadership changes.
• Progressive (PGR): -3.5% despite reporting strong year-over-year growth.
• Gilead Sciences (GILD): -2.5% amid concerns over potential federal funding cuts for HIV prevention initiatives.

Conclusion

As the markets reflect on this day’s activities, the mixed results demonstrate both resilience and underlying challenges. Investors will continue to monitor the intersection of fiscal policy, corporate performance, and global economic trends. The Federal Reserve’s next moves will be closely scrutinized as they adapt to the shifting dynamics of the financial landscape. With the possibility of rate cuts looming in the near future, market participants remain cautiously optimistic amidst ongoing uncertainties.