The Dow Jones Industrial Average rose 436.05 points, or 1.37 percent, to 32,197.59. The S&P 500 increased 102.56 points, or 2.62 percent, to 4,023.61. The Nasdaq Composite Index jumped 469.85 points, or 4.06 percent, to 12,032.42.
All the 11 primary S&P 500 sectors ended in green, with communication services and technology up 5.11 percent and 4.29 percent, respectively, leading the gains.
The Fed on Wednesday raised its benchmark interest rate by 75 basis points, the second in a row of that magnitude, as it races to tame inflation that's running at a four-decade high.
The Federal Open Market Committee, the Fed's policy-making body, decided to raise the target range for the federal funds rate to 2.25 to 2.5 percent and "anticipates that ongoing increases in the target range will be appropriate," the U.S. central bank said in a statement after a two-day policy meeting.
The hike matched the magnitude of the Fed's last move in June, which was its largest single-meeting rate increase since 1994.
In a press conference Wednesday afternoon, Fed Chairman Jerome Powell left the door open for another "unusually large increase" at its next meeting in September, but noted that would depend on upcoming economic data.
Investors should be prepared for "more volatility ahead as the pace of tightening remains uncertain," said UBS analysts in a note Wednesday.
"The stock market is likely to remain range-bound until the Fed pivots, or we get a reacceleration in business activity," they added.
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