Stocks closed sharply higher for a second session Wednesday after the weaker-than-expected final read on first-quarter gross domestic product diminished worries that the Fed would rein in its stimulus measures in the immediate future.
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The Dow Jones Industrial Average rallied 149.83 points, or 1.02 percent, to end at 14,910.14, led by Boeing and Home Depot, after logging a triple-digit gain in the previous session. The blue-chip index posted its 14th triple-digit move of the month.
The S&P 500 jumped 15.23 points, or 0.96 percent, to close at 1,603.26. And the Nasdaq bounced 28.34 points, or 0.85 percent, to finish at 3,376.22.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, declined near 17.
All key S&P sectors ended in positive territory, led by health care and utilities.
The U.S. GDP expanded at a tepid 1.8 percent annual rate, according to the Commerce Department in its final estimate, cut from a previously reported 2.4 percent pace. Economists polled by Reuters had expected first-quarter GDP growth would be left unrevised at 2.4 percent.
"It does show that the Fed may have jumped the gun on how good this economy actually is and since the Fed is very data-dependent, they can't be very happy about this," said Doug Cote, chief market strategist at ING Investment Management. "The biggest thing I'm looking at in this report is consumer spending, which fell to 2.6 percent from 3.4 percent. And with mortgage rates going back up, the effect could spill over into the housing market—we're at an inflection point and it will be very volatile getting back to normal."
A report earlier showed mortgage rates soared to the highest level in nearly two years, according to the Mortgage Bankers Association, as borrowing costs whistled higher on the heels of the Fed's latest policy meeting, when the central bank signaled that it could start cutting back on its stimulus efforts later this year.
Minneapolis Fed President Narayana Kocherlakota told CNBC that the central bank needs to be clearer on the future of short-term interest rates, not just on when the central bank might start to taper its $85-billion-a-month bond-buying program.
Kocherlakota added that the market volatility really comes from uncertainty on when the Fed funds rate might go higher.
Meanwhile, the People's Bank of China (PBOC) released a statement saying that it would provide cash to institutions that needed it. But despite the subsequent uptick in markets, analysts warned there was still plenty of uncertainty in the banking system.
(Read More: Goldman Sees Struggle Ahead for Chinese Stocks)
"Analysts feel this PBOC intervention will only be supportive in the short-term, as the bigger picture is about banks deleveraging and creating a more sound banking system," wrote Stan Shamu, market strategist at IG.
Treasury prices eased their gains after the government sold $35 billion in five-year notes at a high yield of 1.484 percent. The bid-to-cover ratio, an indicator of demand, was 2.45.
(Read More: Three Reasons Rising Rates Could Crush Stocks: Pro)
Gold tumbled near its lowest level in almost three years and was on track for a record quarterly loss. Iamgold, Barrick and AngloGold were among the biggest laggards.
European shares ended higher after research firm GfK's forward-looking consumer sentiment indicator for Germany rose in July, topping expectations.
Meanwhile, Apple bucked the positive trend, with the tech giant closing under $400 a share for the first time since April.
Microsoft rallied after the tech company gave users a peek into its Windows 8.1 software, bringing back the 'start' button and adding several new features in an aim to appeal to users.
Among earnings, General Mills slipped after the cereal maker posted earnings on that met Wall Street forecasts, but gave a lighter-than-expected outlook.
And Monsanto declined after the world's largest seed company said its earnings fell, though sales remained higher. The company also affirmed its profit outlook.
Bed Bath and Beyond and Paychex are among notable companies scheduled to report after the close.
(Read More: Earnings Season Already Looks Like a Train Wreck)
A second wrongful death suit has been filed against energy drink maker Monster Beverage, after a 19-year-old suffered cardiac arrest after consuming the drink.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: Jobless claims, personal income & outlays, pending home sales, natural gas inventories, Fed's Powell speaks, Fed's Lockhart speaks, 7-yr note auction, farm prices, Fed balance sheet/money supply, Apple e-books decision day; Earnings from ConAgra, KBHome, Nike, Accenture
FRIDAY: Fed's Stein speaks, Fed's Lacker speaks, Chicago PMI, consumer sentiment, Fed's Pianalto speaks, Fed's Williams speaks, NewsCorp splits into 2 companies; Earnings from Blackberry
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