“The idea that the Fed is pausing and taking time to see what the cumulative effect is on the economy from a policy standpoint, is the right move for them,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

The S&P 500 has ripped nearly 15 per cent higher this year because of rising hopes that the Federal Reserve will end its hikes to interest rates soon as inflation cools and that the economy will avoid a severe recession. Most of Wall Street’s gains have come from big tech stocks, the ones that would benefit most from easier rates.

The Fed’s latest meeting was preceded on Tuesday by a report showing that inflation continued cooling in May.

A closely watched survey on Friday suggested US consumers are also paring back their expectations for upcoming inflation. That’s key for the Federal Reserve, which doesn’t want high expectations for inflation to kick off a vicious cycle that worsens it. The preliminary reading from the University of Michigan’s survey also suggested consumer sentiment is strengthening more than expected.

Overall, investors contended with a mixed batch of economic updates this week. Sales at US retailers unexpectedly strengthened in May. The resilient employment market showed some signs of weakening as slightly more workers applied for unemployment last week than expected. The manufacturing industry, meanwhile, continued contracting under the impact of higher interest rates.

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Wall Street has also been closely monitoring the latest statements from companies to get a better sense of where the economy is headed. Analysts have been warning of a potential recession this year, but the economy has so far been strong enough to resist. Several industries, though, have been warning about waning demand that could linger through the year.

Chemical company Cabot slumped 8.1 per cent after it said soft demand worldwide, and especially in China, will hurt profits this year.

Software maker Adobe rose 0.9 per cent after reporting solid financial results and raising its profit forecast.

Markets in Europe and Asia gained ground.