The Dow Jones Industrial Average surged 932.27 points, or 2.81 percent, to 34,061.06. The S&P 500 increased 124.69 points, or 2.99 percent, to 4,300.17. The Nasdaq Composite Index rose 401.10 points, or 3.19 percent, to 12,964.86.
All the 11 primary S&P 500 sectors ended in green, with energy and communication services up 4.12 percent and 3.68 percent, respectively, leading the gains.
The Fed on Wednesday announced a half-point increase in its benchmark rate, the sharpest rate hike since 2000, as part of its effort to fight inflation.
The Federal Open Market Committee, the Fed's policy-making body, decided to raise the target range for the federal funds rate to 0.75 to 1 percent, the Fed said in a statement after a two-day policy meeting.
The Fed also decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1.
In a press conference after the release of the Fed's policy decision, Powell said half-point rises remain on the table for the next couple of meetings, but ruled out an even larger rate hike in the immediate future.
"A 75-basis-point increase is not something the committee is actively considering," said the Fed chief.
U.S. equities have been under pressure recently amid growing worries that rapid Fed tightening will slow growth. Powell's latest comments took steam out of market speculation that the Fed would further ratchet up its pace of tightening.
Latest comments