The S&P 500 rallied on Wednesday to snap a five-session losing skid after a policy announcement by the Federal Reserve that raised interest rates to market expectations as the central bank seeks to fight rising inflation without sparking a recession.

The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its biggest rate hike since 1994, and projected a slowing economy and rising unemployment in the months to come.

Equities were volatile after the announcement, before decidedly turning higher after Chair Jerome Powell said in his press conference that either 50 basis points or 75 basis points were most likely at the next meeting in July but that he did not expect hikes of 75 basis points to be common.

"Once the Fed chairman said that there could be a similar 75 basis point increase at the next meeting, that's when the market rose," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"It is sort of a vote of confidence that the Fed is finally awake to the inflation problem and is willing to take a more aggressive stance."

The Dow Jones Industrial Average rose 303.7 points, or 1%, to 30,668.53, the S&P 500 gained 54.51 points, or 1.46%, to 3,789.99 and the Nasdaq Composite added 270.81 points, or 2.5%, to 11,099.16.

The five-session losing streak for the S&P 500 was its longest since early January.

Investors had quickly raised their expectations that the central bank would hike rates by 75 basis points (bps) over the past several days following a stronger than expected reading of consumer prices on Friday. It had previously been widely anticipated the Fed would announce a raise of 50 bps, a rapid swing in expectations that has triggered a violent selloff across world markets.

Fueling the expectation for a larger hike were forecasts changes by analysts at major banks, including those at JP Morgan and Goldman Sachs, which both projected a 75 bps rate hike by the Fed. Investors have since rushed to reprice their bets.

Growing worries about surging inflation, higher borrowing costs, slowing economic growth and corporate earnings have kept equities under pressure for most of the year.

On Monday, the benchmark S&P 500 marked a more than 20% decline from its most recent record closing high, confirming a bear market began on Jan. 3, according to a commonly used definition.

Earlier economic data on Wednesday showed U.S. retail sales unexpectedly fell 0.3% in May as motor vehicle purchases declined amid shortages and record high gasoline prices pulled spending away from other goods, well short of expectations calling for a 0.2% rise.

"Most of the incremental data points have been negative, even this morning the retail sales numbers were soft so just in the last four business days you've had a number of negative economic numbers," said Ellen Hazen, chief market strategist, F.L.Putnam Investment Management in Wellesley, Massachusetts.

Among individual stocks, Citigroup rose 3.52% as one of the best performers on the S&P 500 banks index which gained 1.60%. Nucor Corp advanced 2.41% after it forecast upbeat current-quarter profit on strong steel demand.

Boeing Co surged 9.46% after China Southern Airlines Co Ltd conducted test flights with a 737 MAX plane for the first time since March, in a sign the jet's return in China could be nearing as demand rebounds.

Volume on U.S. exchanges was 13.40 billion shares, compared with the 11.79 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 2.80-to-1 ratio; on Nasdaq, a 2.78-to-1 ratio favored advancers.

The S&P 500 posted 1 new 52-week highs and 41 new lows; the Nasdaq Composite recorded 12 new highs and 258 new lows.