Wall Street rushes to close higher after Fed statement

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, June 13, 2022. REUTERS/Brendan McDermid/File Photo

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  • The Federal Reserve announces the largest interest rate increase since 1994
  • Powell: I don’t expect 75 basis points to be the norm
  • Standard & Poor’s 500 settles series of consecutive losses over five sessions
  • Dow Jones up 1%, Standard & Poor’s 500 up 1.46%, Nasdaq up 2.50%

NEW YORK (Reuters) – The Standard & Poor’s 500 Index rose to a five-session losing streak on Wednesday after the Federal Reserve announced a policy of raising interest rates to market expectations as the central bank sought to combat rising inflation without triggering a crisis. Recession.

The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its largest rise since 1994, and predicted a slowing economy and an increase in unemployment in the coming months. Read more

Stocks were volatile after the announcement, before turning higher after Chairman Jerome Powell said at his press conference that 50 basis points or 75 basis points was likely at the next meeting in July, but he did not expect rises of 75 basis points to be common.

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“Once the Fed chair said there could be a similar 75 basis point increase at the next meeting, that’s when the market rallied,” said Sam Stovall, senior investment analyst at CFRA Research in New York.

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“It’s kind of a vote of confidence that the Fed is finally alert to the inflation problem and ready to take a more aggressive stance.”

Dow Jones Industrial Average (.DJI) The S&P 500 Index rose 303.7 points, or 1%, to 30,668.53 points (.SPX) Gained 54.51 points or 1.46% to 3789.99 points and the Nasdaq Composite (nineteenth) It added 270.81 points, or 2.5%, to 11,099.16 points.

The S&P 500’s five-session streak of losses was the longest since early January.

Investors quickly raised their expectations that the central bank will raise interest rates by 75 basis points over the past several days after a stronger-than-expected consumer price reading on Friday. The Fed was previously widely expected to announce a 50 basis point increase, a rapid swing in expectations that led to a violent sell-off in global markets. Read more

It was the expected changes by analysts at major banks, including JP Morgan and Goldman Sachs, which both expected a 75 basis point rate hike by the Federal Reserve, raising expectations. Investors have since been quick to re-price their bets. Read more

Rising concerns about rising inflation, higher borrowing costs, slowing economic growth and corporate profits kept stocks under pressure for most of the year.

On Monday, the S&P 500 Index (.SPX) It’s down more than 20% from its recent record closing high, confirming that the bear market started on January 3rd, according to a commonly used definition.

Earlier economic data on Wednesday showed that US retail sales unexpectedly fell 0.3% in May as car purchases fell amid shortages and record high gasoline prices drove away other commodities, much less than expectations for a 0.2% rise. Read more

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“Most of the additional data points were negative, as of this morning the retail sales numbers were weak, so just in the last four business days you’ve had a number of negative economic numbers,” said Eileen Hazen, senior market analyst at FLPutnam Investment. Management in Wellesley, Massachusetts.

Among individual stocks, Citigroup (CN) It rose 3.52% as one of the best performers on the S&P 500 Banking Index (.SPXBK) which gained 1.60%. Nocor Corp. (NUE.N) It advanced 2.41% after it had forecast upbeat earnings for the current quarter due to strong steel demand.

Boeing Company (ban) Jumped 9.46% after China Southern Airlines Co., Ltd. (600029.SS) It conducted test flights of a 737 Max for the first time since March, in a sign that the plane’s return in China may be approaching as demand picks up. Read more

Volume on US stock exchanges was 13.40 billion shares, compared to an average of 11.79 billion for the full session over the last 20 trading days.

Advance issues outnumbered declining issues on the New York Stock Exchange by 2.80 to 1; On Nasdaq, the ratio was 2.78 to 1 in favor of advanced traders.

The S&P 500 hit a new 52-week high and 41 new low; The Nasdaq Composite recorded 12 new highs and 258 new lows.

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Additional reporting by Bansari Mayor Kamdar in Bengaluru. Editing by Aurora Ellis

Our criteria: Thomson Reuters Trust Principles.

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