US stocks rose after Federal Reserve Chair Jerome Powell said the central bank has made progress in combating inflation, but warned that more rate hikes are likely.

The S&P 500 gained more than 1% after Powell declared that the disinflationary process has begun, implying that the aggressive tightening cycle is beginning to have the desired effect of slowing the rate of price growth. The Nasdaq 100 gained more than 2%.

Treasuries have also recovered. The two-year yield fell as much as twelve basis points to 4.08%, while the 10-year yield dipped as low as 3.38%. The dollar index has dropped to its lowest level since April.

During the press conference, Powell also avoided a question about the recent easing of financial conditions, which is a measure of market stress that the central bank monitors to determine the effectiveness of its policies. He stated that the emphasis is not on short-term moves, but on long-term changes. Investors were bracing for harsh comments from the Fed aimed at dampening the recent surge in risk assets, which could complicate the Fed's fight against inflation.