Big thumbs-up from Wall St after Fed signals patience on rates

US stocks surged on Wednesday after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy.

Along with better-than-feared quarterly results from Apple Inc, the Fed’s comments helped Wall Street reverse two down days triggered by profit warnings from US bellwethers that signaled a bigger impact from a slowdown in China.

The US central bank held interest rates steady, as widely expected.

While the Fed said continued US economic and job growth were still “the most likely outcomes,” it removed language from its December policy statement that risks to the outlook were “roughly balanced” and struck language that projected “some further” rate hikes would be appropriate in 2019.

It also said it could alter the pace of its balance sheet reduction “in light of economic and financial developments”. The Fed’s balance sheet surged following the 2008 financial crisis, and many investors believe its effort to shrink it may stifle economic growth.

Investors in recent months have become more concerned about the global economy. US corporate results have shown companies including Apple, Intel and Caterpillar are feeling pain from the slowing expansion of China’s economy, which has been hurt by a trade conflict with the United States.

Read: China weakness spreads far and wide, from Caterpillar to Nvidia

“The markets got what they were hoping for in the Fed’s written statement, including both the notion of the central bank’s patience on future rate hikes and greater flexibility in its approach to reducing its balance sheet,” said Mohamed El-Erian, chief economic advisor at Allianz in Newport Beach, California.

Apple shares jumped 6.83% after the company reported a sharp growth in services business, easing concerns after the iPhone maker earlier this month cut current-quarter sales forecast.

Boeing gained 6.25% after the world’s largest plane-maker forecast full-year profit and cash flow above analysts’ estimates amid a boom in air travel and speedier 737 production.

Following the Fed’s rate announcement, all three main US stock indexes extended gains from earlier in the session and the S&P 500 closed at its highest since December 6.

The Dow Jones Industrial Average jumped 1.77% to end at 25 014.86 points, while the S&P 500 gained 1.55% to 2 681.05.

The Nasdaq Composite surged 2.2% to 7 183.08.

Investors were also tracking the latest round of talks between Washington and Beijing that began on Wednesday, the highest-level meeting since US President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce to their trade war in December.

The Philadelphia Semiconductor index surged 2.87%, while the S&P technology index jumped 3.03%.

Microsoft and Facebook, set to report after the closing bell, rose 3% or more.

Of the 168 S&P 500 companies that have reported results so far, 73.2% have topped profit estimates, according to Refinitiv data.

Advancing issues outnumbered declining ones on the NYSE by a 4.09-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored advancers.

The S&P 500 posted 21 new 52-week highs and no new lows; the Nasdaq Composite recorded 27 new highs and 28 new lows.

Volume on US exchanges was 7.9 billion shares, compared with the 7.7 billion-share average over the last 20 trading days.