The S&P 500 rallied on Wednesday to snap a five-session losing skid after a policy announcement by the Federal Reserve that raised interest rates to market expectations as the central bank seeks to fight rising inflation without sparking a recession.

The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its biggest rate hike since 1994, and projected a slowing economy and rising unemployment in the months to come.

Equities were volatile after the announcement, before decidedly turning higher after Chair Jerome Powell said in his press conference that either 50 basis points or 75 basis points were most likely at the next meeting in July but that he did not expect hikes of 75 basis points to be common.

"Once the Fed chairman said that there could be a similar 75 basis point increase at the next meeting, that's when the market rose," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"It is sort of a vote of confidence that the Fed is finally awake to the inflation problem and is willing to take a more aggressive stance."

The Dow Jones Industrial Average rose 1 percent, to 30,669, the S&P 500 gained 1.46 percent, to 3,790 and the Nasdaq Composite added 2.5 percent, to 11,099.

The five-session losing streak for the S&P 500 was its longest since early January.

Investors had quickly raised their expectations that the central bank would hike rates by 75 basis points (bps) over the past several days following a stronger than expected reading of consumer prices on Friday. It had previously been widely anticipated the Fed would announce a raise of 50 bps, a rapid swing in expectations that has triggered a violent selloff across world markets.

Among individual stocks, Boeing surged 9.46 percent after China Southern Airlines conducted test flights with a 737 MAX plane for the first time since March, in a sign the jet's return in China could be nearing as demand rebounds. (Reuters)