U.S. stocks rose sharply in choppy trading on Wednesday after the Federal Reserve announced its widely expected interest-rate hike, the biggest rate increase since 2000.

Stocks initially see-sawed after the announcement. The indexes then steadied and rose more than 1% as Chair Jerome Powell spoke.

The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point and said it would begin trimming its bond holdings next month as a further step in the battle to lower inflation.

The U.S. central bank set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision, with further rises in borrowing costs of perhaps similar magnitude likely to follow.

"It's a testament to how well they messaged, that you deliver a 50-basis point hike and there is not so much as a blink in the market" said Simona Mocuta, chief economist at State Street Global Advisors in Boston. "I would say very incrementally I found it slightly less hawkish than I thought it would be."

Investors were watching Powell's news conference for fresh clues on how far and how fast the central bank is prepared to go in an effort to bring down decades-high inflation.

Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off.

Two separate sets of data showed private employers hired the fewest workers in two years last month, while expansion in the services sector unexpectedly lost some momentum in April.

By 2:53PM ET, the Dow Jones Industrial Average rose 521.75 points, or 1.57%, to 33,650.54, the S&P 500 gained 63.61 points, or 1.52%, to 4,239.09 and the Nasdaq Composite added 165.15 points, or 1.31%, to 12,728.91.

Lyft Inc shares plummeted 33.8% amid concerns about the company's ridership and spending. The ride hailing company reported first-quarter revenue of $875 million, a 44% increase over the previous year, while the number of active riders missed analyst expectations.

Starbucks Corp gained 7.6% after the coffee chain saw quarterly comparable sales grow 12% in North America.

Livent Corp climbed 21.6% after it posted a better-than-expected quarterly profit and bolstered its 2022 revenue outlook on higher demand for lithium used in electric vehicle batteries.

Eight of the 11 major S&P sectors rose, with energy and utilities leading the gains. [O/R]

Bank stocks were up 0.5% after U.S. Treasury two-year yields, the most sensitive to the Federal Reserve's interest rate outlook, soared to their highest since Nov 2018. The benchmark 10-year yield topped 3% for a third consecutive day. [US/]

Declining issues outnumbered advancing ones on the NYSE by a 1.52-to-1 ratio; on Nasdaq, a 1.94-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and 37 new lows; the Nasdaq Composite recorded 25 new highs and 352 new lows.