WASHINGTON—The Federal Reserve indicated Wednesday that it was done raising interest rates for now, fueling a market rally.

Officials voted to hold their benchmark rate steady and delivered an about-face from their policy stance six weeks earlier. Last month, they raised their benchmark rate by a quarter percentage point to a range between 2.25% and 2.5% and signaled two more rate rises were likely this year.

“The case for raising rates has weakened somewhat,” Fed Chairman Jerome Powell said at a news conference after the central bank’s latest policy meeting.

He declined, when asked, to say whether the Fed’s next rate move was more likely to be an increase or a cut. “It’s going to depend entirely on the data,” he said.

Stocks, which were already rallying on earnings reports from Apple Inc. and Boeing Co., extended their gains after the Fed statement. The Dow Jones Industrial Average ended the session up 435 points, or 1.8%—its best day since Jan. 4. The yield on the benchmark 10-year Treasury note fell to 2.694% from about 2.73% before the announcement. Bond yields fall as prices rise and have stabilized following their December slide, with analysts more confident in the U.S. economy.