Stocks rallied Wednesday after the Federal Reserve kept interest rates unchanged, as expected, while highlighting inroads against inflation. Traders also poured back into megacap tech as chip names soared.

The S&P 500 jumped 1.58% to close at 5,522.30, while the Nasdaq Composite popped 2.64% to 17,599.40. It was the best session since February for both indexes. The Dow Jones Industrial Average added 99.46 points, or 0.24%, ending at 40,842.79.

At session highs, the Dow was up 455.30 points, or 1.1%. The S&P 500 and Nasdaq were up as much as 2.1% and 3.2%, respectively, before paring those gains.

During Fed Chair Jerome Powell's press conference Wednesday afternoon, he said if data continues to give the central bank confidence that inflation is slowing, it could be ready to move.

"If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September," Powell said.

The Federal Open Market Committee struck a slightly more optimistic tone in its postmeeting statement, saying that in recent months, further progress has been made toward bringing inflation down closer to the central bank's 2% target.

"The Fed used today's statement to prepare markets for upcoming rate cuts. As inflation rates improve and unemployment increases, the Fed can cut rates yet keep the nominal funds rate above the inflation rate," LPL chief economist Jeffrey Roach said in a note. "Markets will likely respond favorably to the subtle shift in tone."

Jobs data released earlier Wednesday also hinted at a slowing economy and supported central bankers' efforts to reduce inflation. Private job growth slowed further in July as the pace of wage gains dropped to a three-year low, according to the latest ADP report.

Megacap tech names made a comeback during Wednesday's trading session. Nvidia shares gained 12.8%, clawing back some of this month's losses as the stock posted its best day since Feb. 22. The chipmaker soared as better-than-expected results from rival Advanced Micro Devices stoked optimism in the semiconductor space. Other tech stocks such as Apple, Meta Platforms and Amazon were also higher. Microsoft, however, pulled back more than1% on disappointing quarterly cloud revenue.

Boeing added 2% after announcing a new CEO. The aerospace company also reported a wider-than-expected loss and disappointing revenue for the second quarter. Humana, meanwhile, slid 10.6% after posting weak guidance.

Even with tech's revival on Wednesday, the Nasdaq Composite still ended July in the red, off about 0.8%. The S&P 500 advanced 1.1% for the month, while the Dow posted a 4.4% gain for its best month since December amid investors' rotation into cyclical corners of the market.

Stocks close higher on Wednesday

Stocks rose Wednesday after central bankers kept interest rates unchanged. Tech also made a comeback.

The S&P 500 jumped 1.58% to end at 5,522.30, while the Nasdaq rallied 2.64% to close at 17,599.40. The Dow Jones Industrial Average advanced 99.46 points, or 0.24%, to finish at 40,842.79.

— Pia Singh

Russell 2000 briefly touches 2,300 level after Fed announcement

The Russell 2000 briefly touched the 2,300 level Wednesday afternoon. The small-cap index is still on track for a gain of more than 1% despite dipping from that high water mark.

"You look at the intraday chart on the Russell 2000 today, and it had the most violent move up off of the decision and during the press conference," said Paul Baiocchi, chief ETF strategist at SS&C ALPS Advisors.

Small-cap stocks, and small-cap bank stocks in particular, are "the pocket of the market that is seeing the most tailwinds from both the anticipation of rate cuts and the eventual execution of any rate cut," Baiocchi added.

— Jesse Pound

The Great Rotation got real in July

The S&P 500 is essentially flat this month, on the final day of July. The dispersion among sectors is unusually large, though, with tech lagging and everything from defensive to cyclicals to commodities all up this month.

The broadening out of the rally beyond tech is also evident with the Russell 2000's tremendous outperformance in July. The small-cap index has jumped 10% this month. The 10 percentage-point differential between the Russell 2000 and the S&P 500 marks the biggest outperformance for a month by the Russell 2000 since February 2000.

That type of an outperformance by the Russell 2000 is extremely rare. There are only two other times when the magnitude has been greater or equal to this month: February 2000 (an 18 percentage-point outperformance) and January 1992 (also a 10 percentage-point differential).

— Bob Pisani, Robert Hum

Analysts praise new CEO at Boeing as stock jumps on Wednesday

Boeing's CEO change is drawing early praise from Wall Street.

Morgan Stanley analyst Kristine Liwag said in a note to clients that the selection of Kelly Ortberg to replace Dave Calhoun should be a positive for the stock.

"We note that investors historically had a positive impression of Ortberg's tenure at Rockwell Collins. Rockwell Collins was viewed as an operationally solid company with consistent profitability and cash generation. We expect this news to be positively received by the market," Liwag said.

Liwag was not the only analyst to express confidence in the hire. Benchmark's Josh Sullivan described Ortberg as a "known and respected quantity within the aerospace community." Bank of America's Ronald Epstein called the new leader a "very capable executive with a good understanding of operations, the Commercial Aerospace business and the Defense Business."

Shares rose about 4% during the day's trading session.

— Jesse Pound, Michael Bloom

Jeffrey Gundlach says the Fed should have cut rates Wednesday

Bond king Jeffrey Gundlach said the Federal Reserve should have considered cutting rates Wednesday.

"I think they should have cut today, quite frankly," he told CNBC's "Closing Bell" on Wednesday.

Gundlach called the press conference "reassuring" for the market, viewing Fed Chair Jerome Powell as "very well prepared."

He also said it is "laughable" that some investors seem to suggest that a 25 basis-point cut in September could influence presidential politics given its proximity to the November election.

— Samantha Subin

Wall Street breathes 'sigh of relief' after Starbucks earnings

Many on Wall Street are cheering Starbucks' "better than feared" third-quarter financial results.

The coffee giant's adjusted earnings per share was in line with analysts' estimates, but it missed on revenue. However, it maintained its full-year outlook, anticipating low single-digit percentage growth in revenue and earnings per share growth in a range of flat to a low single-digit percentage.

"The quarter itself and sticking to the FY guide after repeated guide downs would fit our description of 'better than feared,' and in that sense likely support the stock near term," Morgan Stanley analyst Brian Harbour wrote in a note Wednesday. He maintained his overweight rating on the stock.

Bank of America breathed a "sigh of relief" after the report, while Goldman Sachs said it sees an attractive risk-reward opportunity. Both also maintained their buy ratings.

"We acknowledge the still-prevalent market skepticism as well as fundamental issues (throughput, engagement of younger customers, etc.) which need to be addressed; however, we believe the worst is behind and expect to see sequential improvement ahead with easing yoy compares and new operational/marketing initiatives in place; consistent with the unchanged FY24 guidance yesterday," Goldman analyst Christine Cho said in a note Wednesday.

While JPMorgan reiterated its overweight rating, it maintained Starbucks is not in the clear yet.

"What we remain cautiously optimistic about — is the team executing on the various consumer facing product and operational initiatives that should allow the near/medium term to perform against lowered expectations," analyst John Ivankoe wrote in a note Wednesday.

At least two names do not see the stock as a buy. Deutsche Bank maintained its hold rating and UBS reiterated its neutral rating.

— Michelle Fox

Market reaction suggests heightened confidence in September cut

The stock rally on the heels of the Federal Reserve's rate decision suggests heightened market confidence in a September cut, said LPL Financial's Quincy Krosby.

"The market's positive reaction suggests traders and investors alike see the Fed easing at the September meeting because inflation continues its path lower rather than an emergency cut because the labor market is deteriorating," said the chief global strategist.

She added that the central bank's statement signals that its mandate to reach price stability and maximum employment have "come into balance."

— Samantha Subin

Bill Ackman's Pershing Square withdraws IPO plans

Pershing Square USA announced Wednesday afternoon that it is withdrawing its previously announced plan to go public via an initial public offering.

"While we have received enormous investor interest in PSUS, one principal question has remained: Would investors be better served waiting to invest in the aftermarket than in the IPO? This question has inspired us to reevaluate PSUS's structure to make the IPO investment decision a straightforward one. We will report back once we are ready to launch a revised transaction," billionaire hedge fund manager Bill Ackman said in a statement.

Ackman said on Tuesday that the investment vehicle would raise about $2 billion in capital, after he initially set an IPO target of $25 billion.

Reuters, citing a person familiar with the matter, earlier reported that Pershing Square had expected to sell up to 40 million shares priced at $50 each and begin trading on the New York Stock Exchange on Aug. 6.

— Pia Singh

Fed holds rates, notes progress on inflation

The Federal Reserve kept interest rates unchanged Wednesday, but highlighted it has made progress on the inflation front.

"In recent months, there has been some further progress toward the Committee's 2 percent inflation objective," the Fed said. "The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance."

— Fred Imbert

Dow outperforms in July, heads for best month of 2024

The Dow has climbed more than 4% this month, running circles around the other major averages as the bulk of blue-chip members advanced.

More than two-thirds of the 30 stocks that comprise the average headed for gains in July. 3M led the way with a 24% surge, placing the stock on pace for its best month since 1999. UnitedHealth and Goldman Sachs were the next-biggest gainers, posting rallies of more than 13% each.

Still, some laggards restricted the index. Notably, Merck has tumbled more than 9% in July, while Microsoft has slipped nearly 7%.

With that rise, the Dow is on pace to notch its best monthly performance this year. By comparison, the S&P 500 has added about 1% in July, while the Nasdaq Composite has slipped around 1%.

— Alex Harring

Stocks making the biggest moves midday

Here are the stocks on the move midday:

• Pinterest — Shares tumbled 12% after the social media company's forward guidance came in below estimates. The company issued third-quarter revenue guidance in a range between $885 million and $900 million, below the $908.6 million consensus estimate analysts polled by FactSet were forecasting. Second-quarter earnings and revenue topped expectations, however, according to LSEG.
• Vistra — The stock soared nearly 14% after the Texas-based power company announced that the Nuclear Regulatory Commission has approved its request to continue operating the Comanche Peak Nuclear Power Plant. The license renewal extends Vistra's operations of the 2,400-megawatt plant through 2053.
• Match Group — Shares of the Tinder dating app owner moved 13% higher after the company posted second-quarter revenue of $864 million. That is above the $856.5 million estimate that analysts polled by FactSet had expected. Match also said it plans to exit live-streaming services in its dating apps and sunset Hyperconnect's live-streaming app "Hakuna," which provides services mainly in Japan and Korea.

Read the full list here.

— Sean Conlon

Bernstein upgrades PayPal to outperform

After nearly three years of underperformance, PayPal is finally on track for positive momentum, according to Bernstein.

Analyst Harshita Rawat upgraded shares to outperform, the first upgrade following a downgrade to market perform in 2021. She also raised her price target by $7 to $78, indicating 22% upside potential from Wednesday's close.

CNBC Pro subscribers can read more here.

— Hakyung Kim

Wall Street stands by Advanced Micro Devices after strong earnings

Strong results and a forecast boost from Advanced Micro Devices are reaffirming Wall Street's confidence in the chipmaker's artificial intelligence potential following the recent sell-off.

"The bottom line, in our eyes, is that data center will be ~70% of [operating profit] next year and AMD is seeing strong momentum in both [graphics processing units] and [central processing units] – which should support a solid multiple on ~$5.75 in EPS in [2025] and ~$7.50 in [2026]," said UBS analyst Timothy Arcuri.

The Nvidia competitor jumped more than 7% after posting strong second-quarter results after the bell Tuesday, signaling ongoing AI chip sales growth. The company now expects data center graphics processing units revenue to reach $4.5 billion this year, versus a previous guide of $4 billion.

Barclays analyst Tom O'Malley viewed the report as a confidence-restoring event for the ramp of the company's MI300 chips. JPMorgan analyst Harlan Sur estimates that AMD can grow GPU server revenue to more than $5 billion this year as it snatches shares from Intel.

Despite the strong quarter and "optimistic" guidance, Morgan Stanley analyst Joseph Moore retained an equal weight rating on shares, highlighting some concerns over deployment delays for AMD's MI300 chips.

"The maturity and ubiquity of the NVIDIA ecosystem is a tough comparison, and from a cloud GPU as a service perspective, we think customers are going to get much better short-term returns deploying NVIDIA; AMD is a longer-term investment," he wrote.

— Samantha Subin

Home construction ETF poised for best month since 2020

The iShares U.S. Home Construction ETF (ITB) tracked for its best month in more than four years.

The fund has climbed more than 19.5% so far in July's trading month, which concludes with Wednesday's closing bell. That would mark the exchange-traded fund's largest monthly gain since April 2020, when it jumped more than 26%.

The lion's share of stocks comprising the fund tracked to end the month with gains. Mohawk Industries led the ascent with a surge of more than 40% in the month. M/I Homes and Installed Building Products followed, with each jumping more than 30%.

— Alex Harring

Nvidia surges 11% after strong AMD earnings, heads for best day since February

Nvidia popped 11% on the heels of a strong print and guidance boost from Advanced Micro Devices that reaffirmed Wall Street's confidence in the artificial intelligence trade. The rally put the AI darling on pace for its best day since February, when shares skyrocketed more than 16%.

The news lifted Advanced Micro Devices more than 6%. Other chipmaking stocks rallied in sympathy, with Qualcomm and Marvell Technology last up at least 4% each. Broadcom jumped 9%, while Micron Technology added more than 7%.

The VanEck Semiconductor Index was last up more than 6% and headed for its best session since February.

— Samantha Subin

Bank of America says Fed may not signal a September cut is a 'done deal'

Investors are largely expecting the Federal Reserve on Wednesday afternoon to give a strong signal that it will cut rates at its next meeting in September, but Bank of America isn't so sure.

"The Fed is optimistic that cuts are likely in the near term, but we do not think it is willing to signal September is a done deal," wrote Bank of America economists including Michael Gapen in a note Wednesday. "It could happen, but it would depend on the data."

Bank of America notes that the tone of recent Fed speakers has been to be data dependent without giving a specific signal a cut is coming.

Part of the morning rally in stocks is due to expectations the Fed will keep rates on hold at 2 p.m. ET but give a solid hint of a cut in September and lay the groundwork for multiple cuts the rest of the year.

— John Melloy

Stocks open higher on Wednesday

The S&P 500 opened 1.2% higher shortly after 9:30 a.m. ET. The tech-heavy Nasdaq Composite gained 1.9%, while the Dow Jones Industrial Average opened roughly 57 points higher, or about 0.1%.

— Pia Singh

AMD, Pinterest, Match Group among stocks making biggest moves in premarket trading

These are the stocks making headlines before the bell:

• Pinterest — The social media stock slumped 11% after forward guidance trailed estimates.
• Match Group — The owner of the Tinder dating app surged 9% after posting $864 million in second-quarter revenue postmarket Tuesday, above analysts' estimate of $856.5 million, according to FactSet.
• Advanced Micro Devices — Shares popped nearly 9% after the chipmaker's earnings and revenue beat analysts' estimates postmarket Tuesday.

Read the full list here.

— Lisa Kailai Han

Employment cost measure up 0.9% in Q2, less than forecast

The employment cost index, a closely watched inflation variable for the Federal Reserve, increased less than expected in the second quarter, the Labor Department reported Wednesday.

Total compensation costs including salaries and benefits rose 0.9% for the April-through-June period, less than the 1.2% in the first quarter and below the Dow Jones estimate for a 1% increase.

On a year-over-year basis, the index was up 4.1%, down from 4.5% for the same period a year ago.

— Jeff Cox

U.S. crude oil jumps after Hamas political leader assassinated in Tehran

U.S. crude oil futures jumped more than 3% on Wednesday after Hamas political leader Ismail Haniyeh was assassinated in Tehran, renewing fears that the Middle East is teetering on the brink of a regional war.

The West Texas Intermediate contract for September rose 3.51% to $77.28 per barrel, while the Brent September contract gained 2.67%, or 80.73 per barrel.

Iran's paramilitary Revolutionary Guard accused Israel of assassinating Haniyeh at his residence in Tehran. Iran's supreme leader Ayatollah Ali Khamenei said it is Iran's duty to punish Israel for this action, according to a Google-translated report from the state-run Islamic Republic News Agency.

Haniyeh's assassination casts even more uncertainty over a potential Gaza cease-fire deal between Israel and Hamas. Haniyeh was a senior negotiator in the talks.

— Spencer Kimball, Ruxandra Iordache

Private job gains totaled just 122,000 in June, less than expected, ADP says

Private payroll growth was less than expected in July as companies added the fewest jobs since January, ADP reported Wednesday.

The payrolls processing firm said nongovernment job growth was just 122,000, down from 155,000 in June and below the Dow Jones estimate for 150,000. Job growth was strongest in the trade, transportation and utilities as well as the construction sectors, while professional and business services and information services both saw losses.

On wages, earnings grew 4.8% from a year ago, the smallest increase in three years.

— Jeff Cox

Boeing stock rises after announcing new CEO

Shares of Boeing were climbing higher in premarket trading after the company announced a new CEO.

The aerospace giant announced that Collins Aerospace CEO Kelly Ortberg will replace Dave Calhoun, who has faced heavy criticism for manufacturing quality issues at the company.

Boeing also announced second-quarter results that were weaker than expected. The company's adjusted loss per share was $2.90 on $16.87 billion of revenue. Analysts surveyed by LSEG were expecting a loss of $1.97 per share and $17.23 billion of revenue.

— Jesse Pound

Humana drops on weak guidance

The health insurance giant dropped more than 7% as lackluster earnings guidance overshadowed better-than-expected second-quarter results.

Humana reiterated its full-year bottom-line forecast of about $16 per share. Analysts polled by StreetAccount, however, expected guidance of $16.34 per share. Second-quarter earnings of $6.96 per share, excluding items, and revenue of $29.38 billion topped analysts' expectations.

— Fred Imbert

Bank of Japan raises rates ahead of Fed decision

The Fed is expected to keep rates unchanged Wednesday, but another major central bank made a key policy change overnight.

The Bank of Japan raised its benchmark rate to around 0.25%. That marks the country's highest rate level since October 2008. The move boosted Japan's Nikkei 225 index, which closed 1.5% higher.

— Fred Imbert

S&P 500, Nasdaq head for monthly loss

Wednesday marks the last trading day of a volatile month on Wall Street, with two of the three major benchmarks set to post a monthly loss.

Through Tuesday's close, the S&P 500 and Nasdaq were down 0.5% and 3.3%, respectively, for July. That would mark their first monthly pullback in three months.

The Dow Jones Industrial Average, however, is set for its best monthly performance since December, up 4.1%. That would also mark the Dow's third straight one-month gain.

— Fred Imbert

Kamala Harris speaks in Atlanta, focuses on tackling consumer prices

Vice President Kamala Harris said she would push to lower costs for consumers if she is elected as president in November.

"On day one, I will take on price gouging and bring down costs," she said at a rally in Atlanta on Tuesday evening. "We will ban more of those hidden fees and surprise late charges that banks and other companies use to pad their profits."

She also pledged to "take on corporate landlords and cap unfair rent increases."

Harris' call to combat high consumer fees is a page out of the Biden administration's book. The White House has put forth initiatives to crack down on surcharges tied to goods and services — also known as junk fees — including overdraft fees assessed by banks.

Get the details on Harris' rally from CNBC's Rebecca Picciotto here.

— Darla Mercado

Wells Fargo analyst eyes consumer commentary, calls rate of sales beats 'disappointing'

Wells Fargo analyst Christopher Harvey said he is watching to see if concerns about the health of the consumer show among higher income brackets.

"The only question is whether the weakness migrates up the income spectrum," Harvey wrote to clients in a Tuesday note.

Harvey said reports so far this season have highlighted worries about the state of the consumer broadly. While earnings from S&P 500-listed companies are coming in ahead of expectations, he called the rate of sales beats "disappointing" and noted commentary around customers has been largely negative.

— Alex Harring

See the stocks moving in extended trading

These are some of the stocks making notable moves after hours:

• Microsoft — Shares slid more than 6% after the tech titan shared disappointing results out of its cloud business. That overshadowed beats on both lines for the fiscal fourth quarter.
• Advanced Micro Devices — The chip stock popped more than 7% on the back of better second-quarter results than the Street predicted. AMD posted adjusted earnings of 69 cents per share and revenue of $5.84 billion, while analysts polled by LSEG called for 68 cents in earnings per share and $5.72 billion in revenue.
• Pinterest — The image-sharing service dropped close to 12% after issuing disappointing guidance for third-quarter revenue. Pinterest offered a range of $885 million to $900 million, missing analysts' expectations. 

See the full list here.

— Alex Harring

Stock futures are lower

Stock futures traded down shortly after 6 p.m. ET.

Dow futures slipped around 200 points, or 0.4%. S&P 500 and Nasdaq 100 futures dipped 0.2% and 0.1%, respectively.

— Alex Harring