NEW YORK (AP) -- U.S. stocks rocketed to their biggest gain in eight months Wednesday after Federal Reserve Chairman Jerome Powell hinted that the Fed might not raise interest rates much further. The Dow Jones Industrial Average surged 617 points.
In a speech to the Economic Club of New York, Powell said that rates are close to "neutral," the level at which they neither hold back growth nor aid it. That might mean the Fed isn't planning to raise interest rates far above their current levels. Powell also appeared to suggest that the Fed might pause its cycle of interest rate increases next year so the central bank can assess the effects of its actions.
That relieved investors who feel the nine-year-old bull market could come to an end if rates rise too fast. Those worries have contributed to the market's big slump in October and November. The other major factor is the trade dispute between the U.S. and China. Presidents Donald Trump and Xi Jinping are scheduled to discuss their differences this weekend at a meeting of the Group of 20.
Wall Street has grown pessimistic that the nations will resolve their differences any time soon. Whether they make progress or not, stocks could have a strong reaction to the Trump-Xi meeting.
Stocks rose in morning trading and nearly tripled their gains as Powell spoke. Bond yields slipped and the dollar weakened as investors adjusted their expectations for how quickly interest rates might rise in the future.
After slashing interest rates to near zero before the 2008-09 financial crisis, the Fed has been steadily raising them since the end of 2015 and it's expected to announce another increase in December. But higher interest rates tend to slow economic growth, and since growth in the U.S. and other regions is already likely to slow down next year, investors are concerned the increases will hinder the economy.
"He's acknowledging that if you make an interest rate move today, you're not really going to feel the effects of it for 12 to 18 months," said Jack Ablin, chief investment officer of Cresset Wealth Advisors. "Global central bank tightening (of rates) was probably the biggest risk that equity investors faced over the next four quarters, so having the Fed chairman come out and suggest they're almost done is welcome news."
The S&P 500 index surged 61.62 points, or 2.3 percent, to 2,743.79, its biggest gain since March 26. The S&P 500 has gained 4.2 percent this week, but would still need to rise another 6.8 percent to return to its record high from late September.
The Dow Jones Industrial Average jumped 617.70 points, or 2.5 percent, to 25,366.43. The Nasdaq composite rose 208.89 points, or 2.9 percent, to 7,291.59. The Russell 2000 index of smaller-company stocks gained 37.53 points, or 2.5 percent, to 1,530.38.
After an initial decline, bond prices turned higher, sending yields lower. The yield on the 10-year Treasury note fell to 3.06 percent from 3.07 percent earlier in the day. It stood at 3.05 percent late Tuesday. The yield on the 2-year note steadied at 2.81 percent.
The dollar weakened, which sent metals prices higher. The ICE US dollar index lost 0.6 percent.
Customer-management software developer Salesforce surged 10.3 percent to $140.64 after its earnings and revenue were stronger than analysts expected. That helped pull technology companies higher. Software maker Adobe rose 7.3 percent to $249.21. Apple jumped 3.8 percent to $180.94 and Microsoft rose 3.7 percent to $111.12.
Tiffany skidded 11.8 percent to $92.54 after it said foreign tourists, especially from China, didn't spend as much at its stores in its latest quarter. That contributed to disappointing sales for the company. Chinese economic growth has slowed since the government clamped down on bank lending last year as part of an effort to rein in surging debt. The U.S.- China trade dispute has also contributed to the slowdown.
Jam and packaged food maker J.M. Smucker fell 7.2 percent to $101.28 after it reported a smaller profit and less revenue than analysts had expected. Smucker also lowered its forecasts for the full year.
Boeing recovered a sliver of its recent losses as investigators in Indonesia discussed their probe into the crash of a Boeing 737 MAX 8. Indonesian authorities said they are still struggling to understand why the plane crashed. Questions about the crash have pulled Boeing's stock lower. Despite a 4.9 percent gain Wednesday, to $333.50, it's still down 10 percent since Nov. 8, when federal regulators gave an emergency directive telling pilots how to handle incorrect data from a sensor that may have malfunctioned during the flight.
The dollar fell to 113.53 yen from 113.79 yen. The euro rose to $1.1376 from $1.1296.
Benchmark U.S. crude slipped 2.5 percent to $50.29 a barrel in New York. Brent crude, the standard for international oil prices, sank 2.4 percent to $58.76 a barrel in London.
Wholesale gasoline lost 1.6 percent to $1.40 a gallon. Heating oil fell 2.5 percent to $1.84 a gallon. Natural gas rocketed 10.6 percent to $14.72 per 1,000 cubic feet.
Gold rose 0.8 percent to $1,223.60 an ounce. Silver jumped 1.7 percent to $14.33 an ounce. Copper soared 3.3 percent to $2.80 a pound.
FTSE 100 in Britain fell 0.2 percent and Germany's DAX lost 0.1 percent. France's CAC 40 was little changed.
Japan's benchmark Nikkei 225 rose 1 percent and South Korea's Kospi recovered 0.4 percent. Hong Kong's Hang Seng added 1.3 percent.