Technology companies led a broad Wall Street rally on Wednesday, as investors hailed another Fed rate hike as evidence that the central bank is stepping up its anti-inflationary efforts.
The Federal Reserve of the United States raised its federal fund’s rate by 0.75 percentage points to 2.25 percent to 2.5 percent, saying it is “dedicated to restoring inflation to 2%.”
Jerome Powell said the Fed’s rate hikes had helped slow the economy and ease inflationary pressures. Some on Wall Street interpreted this as a sign that the Fed may not need to raise interest rates as aggressively in the coming months, causing stocks to rise in the final hour of normal trading.
The S&P 500 increased by 102.56 points (2.6%) to 4023.61. The Dow rose 436.05, or 1.4%, to 32197.59. The Nasdaq Composite jumped 469.85 points, or 4.1%, to 12032.42.
LPL Financial’s Quincy Krosby: “The Fed is prepared to continue decreasing inflationary expectations until price stability.” “The market wants How fast will inflation fall?
Microsoft and Alphabet rose 6.7 percent and 7.7 percent , respectively, after their latest quarterly reports. Boeing rose 0.1 percent after the aerospace company reported it delivered more planes in the first quarter than it has since the start of the pandemic.
Traders all over the world were looking at the Fed’s decision on interest rates during a busy and important week on the world’s markets.
Investors are watching central bankers for signs of the extent of any interest-rate hikes this year and if rates will be reduced next year.
Fed policymakers acknowledged slowing economic growth in a policy statement. Mr. Powell said rate hikes should be slowed.
Bespoke Investment Group observed on Tuesday that the stock market has done well on Fed rate hike days this year. Wednesday’s 0.75-percentage-point hike was the Fed’s second this year. Since the 1980s, the Fed hasn’t raised rates so swiftly.
Principal Global Investors chief global strategist, Seema Shah, wants to know what Powell thinks about inflation and growth. But be careful. In recent months, we’ve learned not to overinterpret broad advice.
Investors expect the Fed to keep hiking interest rates, keeping the U.S. Treasury yield curve inverted. This signal often predicts recessions. Many investors don’t anticipate July’s stock gains to endure.
Ms. Shah said it doesn’t mean a recession won’t happen soon. “The greatest bear-market rally”
Investors worry that the Fed’s tightening policy could cause a recession. Second-quarter GDP statistics will be released on Thursday.