S&P 500, Nasdaq firm after Fed signals upcoming rate cut

By Chibuike Oguh

NEW YORK (Reuters) -The S&P 500 and Nasdaq held onto early gains on Wednesday after the Federal Reserve left U.S. interest rates unchanged but indicated it will likely begin easing monetary policy in September as inflation cools.

All 11 sectors of the benchmark S&P 500 advanced, led by technology and consumer discretionary stocks. The Nasdaq and the blue-chip Dow also rose.

The Fed kept its benchmark overnight interest rate in the 5.25%-5.50% range at its two-day policymaking meeting ended on Wednesday, but opened the door to easing in September, seven weeks shy of the November U.S. elections.

The Dow Jones Industrial Average rose 0.73% to 41,042.37, the S&P 500 gained 1.64% to 5,525.37 and the Nasdaq Composite gained 2.45% to 17,567.41.

"It was the worst kept secret on the planet that the Fed was not going to cut in July," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma. "The Fed is going to have its day in the sun in September with a 25 or 50 basis point cut, but I would not be surprised if that is already priced into stocks."

(Reporting by Chibuike Oguh in New York; Additional reporting by Noel Randewich in Oakland, California; Editing by Richard Chang)