(CNBC) -- U.S. equities closed higher on Wednesday as investors cheered the Federal Reserve's plan for scaling back its massive $4.5 trillion balance sheet.
The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, according to the minutes from its May 3 meeting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.
"The Fed provided more clarity here," said Matt Toms, chief investment officer of fixed income at Voya Investment Management. "They're implying the ability to modulate their balance-sheet reduction plan. It shows the Fed is not on auto-pilot and that they can adopt as needed."