Stocks end higher after Fed accelerates stimulus pullback

Technology companies led a rally for stocks on Wall Street Wednesday after the Federal Reserve said it would accelerate its pullback of economic stimulus and likely raise interest rates three times next year to tackle rising inflation.

The central bank plans to shrink its monthly bond purchases at twice the pace it previously announced, likely ending them altogether in March. The bond purchases were intended to hold down long-term rates to aid the economy but are no longer needed with unemployment falling and inflation at a near-40-year high. The accelerated timetable puts the Fed on a path to start raising rates as early as the first half of next year.

The major stock indexes rose tentatively after having been down before the release of the Fed’s statement at 2 p.m. Eastern, then gained momentum toward the end of the day. The S&P 500 rose 1.6%, nearly recouping all of its losses from the previous two days. The benchmark index ended just below the record high it set last Friday.

The Dow Jones Industrial Average rose 1.1% and the tech-heavy Nasdaq composite gained 2.2%. The Russell 2000 index of smaller-company stocks rose 1.6%. Bond yields edged higher.

The central bank’s policymakers, holding their last meeting of the year, had been widely expected to announce a faster pullback of its stimulus measures as inflationary pressures build.

“The market is interpreting this as no big surprise,” said Liz Young, chief investment strategist at Sofi.