Wall Street's benchmark indexes rallied on Thursday following a remark from Atlanta Fed President Raphael Bostic, saying he preferred a "slow and steady" approach to monetary tightening.
The Dow Jones increased by 341.73 points or 1.05 percent to 33,003.57. The S&P 500 rose by 29.96 points or 0.76 percent to 3,981.35. Meanwhile, the Nasdaq Composite added 83.50 points or 0.73 percent to 11,462.98.
The S&P index traded just above its key support level of 3,940 after momentarily sliding below that level for the first time since January 25, early in the trading session.
Shares of the cloud-based software company Salesforce saw an 11.50 percent increase, its biggest daily percentage gain in over a year after the firm projected higher-than-anticipated first-quarter revenue and increased its share buyback to $20 billion.
Macy's also saw a significant increase of 11.11 percent after the department store operator predicted higher-than-expected annual profit.
Tesla shares, on the other hand, plunged 5.85 percent after its Investor Day presentation failed to deliver key details regarding the carmaker's plan to produce affordable electric vehicles.
Crypto lender Silvergate Capital shares also plummeted by 57.72 percent after it delayed the release of its annual report, saying it was concerned about the capacity to continue operations.
Bostic said he favored a 25-basis-point increase over a bigger increase. His remark was less hawkish than that of other Fed officials, who said they would consider a 50-basis-point increase in the upcoming Federal Open Market Committee (FOMC) meeting.
The Atlanta Fed President explained that a quarter-point hike was appropriate for the Fed because the U.S. economy would likely only start to experience the impact of higher interest rates in the spring.
Spouting Rock Asset Management chief strategist Rhys Williams said Bostic's remark was "comforting" because the market considered him as the "hawkish end of hawkish people."
"The Fed is not crazy, they understand monetary policy works with a lag, so you are just starting to see how the impact of the first-rate hikes, let alone the other 400 basis points they did," Williams added.
At Wall Street's closing bell, however, Fed governor Christopher Waller said a slew of "hot" inflation data could push the federal funds rate above the projected 5.1 to 5.4 percent range. Fed funds futures forecast the probability that the interest rate will peak at the range of 5.5 to 5.75 percent.
Investors are now anticipating the job report and consumer price index for February, which will serve as guidance for the Fed's policy rate approach in the FOMC meeting later this month.
Recession to start later than anticipated
The National Association for Business Economics showed that most of the economists it surveyed had projected that a recession would begin later than expected in the U.S. due to signs that the economy remained robust despite the Fed's attempt to slow it down via its tight policy.
This January, the U.S. added more than 500,000 payrolls, while the unemployment rate reached 3.4 percent, its lowest rate in over five decades. Furthermore, unemployment benefit claims fell last week, indicating a strong job market in February as well.
Retail sales in January also experienced a significant increase of three percent in January, the highest jump in two years. The data suggested that consumers were still willing to spend despite price increases.
Economists said the Fed's interest rate hike would lead to higher borrowing costs and increased interest rates on business loans. The tighter credit will eventually weaken the economy and potentially cause a recession. Analysts have repeatedly warned that the Fed has never managed to avoid a recession while bringing down inflation from high levels.