WALL Street stocks rallied on Thursday, in a sign that the stock market sees the Federal Reserve’s campaign of raising interest rates as ending soon.

All three major indices jumped more than one per cent, a day after the Fed kept rates unchanged but signaled it expects further hikes in 2023.

The Dow Jones Industrial Average rose 1.3 per cent to 34,408.06.

The broad-based S&P 500 climbed 1.2 per cent to 4,425.84, while the tech-rich Nasdaq Composite Index also advanced 1.2 per cent to 13,782.82.

Despite Fed forecasts suggesting two more interest rate hikes this year, Treasury yields pulled back, suggesting skepticism that the central bank will follow through with more increases.

“If you look at interest rates, they are down,” said Tom Cahill of Ventura Wealth Management.

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“The stock market is not believing that the Fed will be able to raise two or three more times, the bond market is not believing it, so I guess the Fed are the only group in town believing it,” Cahill added.

US retail sales in May rose 0.3 per cent from April to US$686.6 billion, more than analysts had expected. Sales at petrol stations fell, but rose in other venues, such as restaurants and bars.

The Fed’s decision to keep rates unchanged was followed on Thursday by a move by the European Central Bank to lift interest rates for the eight consecutive time, in an inflation-fighting move. AFP