Dow rises 932 points after Federal Reserve announces interest rate hike

May 4 (UPI) -- U.S. markets rose sharply Wednesday as the Federal Reserve followed through on plans to hike interest rates by a half-point.

The Dow Jones Industrial Average gained 932.27, or 2.81%, the S&P 500 rose 2.99% and the Nasdaq Composite closed the day up 3.19%.

The Fed said that most members of the Federal Open Market Committee felt that the half-point increase is the appropriate action to tame inflation while also announcing the start of a program to wind down its $9 trillion balance sheet by $95 billion per month, beginning in June.

Federal Reserve Chairman Jerome Powell also eased investors' fears as he said a 75-basis point hike "is not something that committee is actively considering" in future meetings.

"I think expectations are that we'll start to see inflation, you know, flattening out," he said.

Former Goldman Sachs President Gary Cohn told CNBC that Powell "drove it right down the middle of the road" during his news conference.

"I think the market is starting to say, 'OK. We've got this pretty well priced in.' I don't think there's a lot of surprises out there," Cohn said. "We've taken a lot of the fluff out of the market. We've taken a lot of the hot air out of the market ... We've now got some real value."

All 30 Dow stocks rose on Wednesday and stocks seen as economic bellwethers also were also on the rise with Caterpillar gaining 4.2% and Home Depot increasing 3.39%.

Major tech stocks also surged following the Fed's announcement as Google parent, Alphabet, rose 4.2% and Apple gained 4.1%.

ExxonMobil stocks rose 3.96% and Chevron gained 3.14% as oil benchmarks, Brent and West Texas Intermediate crude both rose 5% after the European Union proposed banning Russian oil imports in a six-month plan.

Starbucks stock was up 9.83% and shares of Airbnb rose 7.71% after both companies reported better-than-expected quarterly earnings.

The Fed news also helped to overshadow ADP-Moody's report Wednesday that the U.S. economy added almost 250,000 private-sector jobs in April, missing expectations by about 130,000 hirings.

President Joe Biden on Wednesday also announced that the U.S. government will reduce its $23.9 trillion national debt for the first time in six years, dropping $26 billion this quarter, but will likely rise through the rest of the year.