The S&P 500 cut losses to close sharply higher Wednesday, underpinned by a rebound in tech stocks after the Federal Reserve said it would accelerate its taper and projected the first liftoff in rates next year.
The S&P 500 was up 1.63% to 4,709.85, the Dow Jones Industrial Average rose 1.1%, or 383 points, and the Nasdaq Composite added 2.1%.
The committee said it would increase the taper of its bond purchases by $30 billion a month in January, double the $15 billion monthly pace announced in November.
The timeline on rate hikes was brought forward, with up to three rate hikes projected next year, followed by another three in 2023, taking the Fed's benchmark rate to 1.6%.
"We see our forecast of three interest rate hikes [in 2022], the first probably in the spring (second quarter), confirmed," Commerzbank said in a note.
Risk sentiment improved following the announcement as a faster taper and earlier path to monetary policy tightening was largely priced in ahead of the Fed meeting.
Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), and Apple (NASDAQ:AAPL), which combined make up more than fifth of the broader S&P 500, cut their losses and sparked a broader market rebound.
Consumer discretionary also played a big role in the rebound as Tesla (NASDAQ:TSLA) pared losses as investors appeared to renew their appetite on growth stocks.
Health stocks were pushed higher by an 8% jump in Eli Lilly (NYSE:LLY) after the pharmaceutical giant upgraded its earnings outlook for 2021, and guided further strength for 2022.
Energy remained under pressure even as oil prices cut their losses as fears persisted about supply outpacing demand in the wake of growing concerns about the Omicron threat on travel, and ultimately energy demand.
Devon Energy (NYSE:DVN), Occidental Petroleum (NYSE:OXY), Diamondback Energy (NASDAQ:FANG) fell more than 2%.