The Dow added nearly seven-tenths of a percent, the S&P 500 gained 1% and the Nasdaq jumped more than 1.6%.

Fed Chair Jerome Powell, in a press conference, acknowledged the U.S. economy's strength, leaving the door open for further rate hikes to bring the annual inflation rate closer to the central bank's two percent target.

But another hike likely won't come before year's end, says Eric Diton, President and Managing Director of The Wealth Alliance.

"I don't think it's happening this year simply because the markets have done the Fed's dirty work. What I mean by that is that longer rates - the 10-year - has moved up a good 1% in the last few months. We hit 5% - which we haven't seen since 2007. That's a major tightening of credit, and that in and of itself can slow the economy. That allows the Fed to kind of sit back and watch, and that's what they're doing."

Earnings season, now about halfway through, has been a mixed bag for stocks, even though about 80% of S&P 500 companies that have reported beat analyst expectations for the quarter.

Still investors were disappointed by many quarterly updates.

Estee Lauder shares tumbled almost 19% after the beauty products maker cut its annual profit outlook.

Payroll processor Paycom Software saw its shares plunge 38.5% after it projected for downbeat fourth-quarter revenue.

And shares of Tinder owner Match Group fell more than 15% after it also forecast fourth-quarter revenue below estimates.