Wall Street's three main stock indexes closed sharply higher Thursday on hopes that the U.S. Federal Reserve has reached the end of its interest rate hiking campaign while a batch of upbeat quarterly financial updates added to the bullish mood.

The Fed held interest rates steady on Wednesday as expected, and while Chair Jerome Powell left the door open to further tightening he also acknowledged the impact of a recent surge in bond yields on the economy.

The comments, viewed as hints that the central bank is done with its rate hikes, sent longer-dated U.S. Treasury yields tumbling, which supported stocks.

"Powell's comments in the presser yesterday were what everyone wanted to hear," said Justin Burgin, vice president of equity research at Ameriprise Financial in Troy, Michigan.

Burgin also pointed to better-than-expectated earnings reports. While the current-quarter guidance has been weaker than previously expected, Burgin said analysts are still forecasting growth.

"The fact the wheels didn't come of the bus for the fourth quarter is pretty good," he said.

According to the latest LSEG data, Wall Street is now forecasting fourth-quarter earnings growth of 7.2%, down from 11% on Oct. 1, before the reporting season began. And for the third quarter, 80.9% of companies reporting so far have beat analysts' expectations while 14.9% have missed expectations.

According to preliminary data, the S&P 500 gained 80.30 points, or 1.89%, to end at 4,317.77 points, while the Nasdaq Composite gained 233.40 points, or 1.79%, to 13,294.87. The Dow Jones Industrial Average rose 564.50 points, or 1.78%, to 33,839.08.

After stocks tumbled in October, "the set-up was well primed for a bit of a relief rally," said Emily Leveille, portfolio manager at Thornburg Investment Management in Santa Fe, New Mexico.

Investors were also reassured by the Fed's hints that it might pause rate hikes for now, she added.

Traders' bets that the Fed will hold rates steady in December rose to about 83% from 79.5% the previous day, according to CME Group's FedWatch tool.

Among individual stocks, Starbucks rallied sharply after the coffeehouse company's fourth-quarter results beat estimates. Also Qualcomm shares climbed after the chip designer forecast first-quarter sales and profit above estimates.

PayPal shares jumped as the payments giant raised its full-year adjusted profit forecast. Apple shares rose ahead of its report, which is due later on Thursday.

Other big stock movers included Moderna, which sold off after lowering its 2023 COVID-19 vaccine sales forecast.

Data released earlier in the day showed the number of Americans filing new claims for unemployment benefits increased moderately last week.

This week's key economic data release will be the October non-farm payrolls report due on Friday