(Bloomberg) -- U.S. stocks rose, reversing earlier declines as Federal Reserve officials scaled back forecasts for how high interest rates will rise this year, citing the potential impact from weaker global growth and financial-market turmoil on the U.S. economy.
The Standard & Poor’s 500 Index added 0.4 percent to 2,024.18 at 2:03 p.m. in New York, amid the lightest trading volumes of the year.
The Federal Open Market Committee kept the target range for the benchmark federal funds rate at 0.25 percent to 0.5 percent, the central bank said in a statement Wednesday following a two-day meeting in Washington. The median of policy makers’ updated quarterly projections saw the rate at 0.875 percent at the end of 2016, implying two quarter-point increases this year, down from four forecast in December.
“The committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen,” the FOMC said. “However, global economic and financial developments continue to pose risks.”
It is the third major central-bank policy event since Thursday, following an unprecedented stimulus package unleashed by the European Central Bank, and after the Bank of Japan held off from adding more to its record stimulus as officials gauge the impact of a negative interest-rate strategy adopted in January.
U.S. stocks have rebounded in the past month, bolstered by improving data, rising crude prices and as central banks around the world indicated a willingness to continue measures to support growth and stabilize markets after a tumultuous start to the year.
The S&P 500 has risen 10 percent since its February low, trimming its 2016 drop to just 1.6 percent. The index is among the best-performing developed-market benchmarks tracked by Bloomberg this year.
Fed officials have stressed that the pace of rate boosts will be gradual and data-dependent. A report today showed consumer prices excluding food and fuel climbed more than forecast in February for a second month, adding to signs inflation is moving closer to the central bank’s target. Separate measures showed new-home construction rose more than economists forecast last month and factory production increased for a second month, indicating manufacturing may be starting to stabilize.
--With assistance from Manisha Jha. To contact the reporter on this story: Dani Burger in New York at [email protected] To contact the editors responsible for this story: Cecile Vannucci at [email protected] Trista Kelley