The bond market swings, but US stocks remain steady after the Fed says it won't raise interest rates

NEW YORK (AP) — The bond market swung Wednesday, while U.S. stocks ticked higher following the Federal Reserve ’s decision not to raise its main interest rate to bring down high inflation. The bond market’s moves indicated traders see less of a chance of hikes to rates in the future that would help ease inflation but could also hurt the economy.

The S&P 500 rose 0.3% after drifting between small gains and losses through the day, both before and after the Fed’s decision. The Dow Jones Industrial Average added 97 points, or 0.2%, and the Nasdaq composite rose 0.3%.

The action was much stronger in the bond market, where the yield on the two-year Treasury initially climbed after the Fed announced it was holding the federal funds rate steady. It got above 4.79% from 4.70% late Tuesday after the Fed said two officials actually wanted to raise the fed funds rate, only to get outvoted by their peers.

The central bank last month raised its main interest rate for the first time in three years in hopes of bringing down inflation, which has remained above the Fed’s 2% target for years and has been discouraging Americans broadly.

But the two-year Treasury yield, which closely tracks expectations for Fed action, quickly reversed course. It dropped as low as 4.69% after Fed Chairman Kevin Warsh said the central b