HomeBusinessWall Street rallies to close higher after Fed statement

Wall Street rallies to close higher after Fed statement

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

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  • Fed announces biggest rate hike since 1994
  • Powell: doesn’t expect 75 bps to be the norm
  • S&P 500 ends five-game losing streak
  • Dow up 1%, S&P 500 up 1.46%, Nasdaq up 2.50%

NEW YORK, June 15 (Reuters) – The S&P 500 rallied on Wednesday to snap a five-session losing slip after a Federal Reserve policy announcement that raised interest rates to market expectations as the central bank seeks to combat rising inflation without triggering a recession.

The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its biggest rate hike since 1994, and forecast a slowing economy and rising unemployment in the months ahead. Read more

Stocks were volatile following the announcement, before rising decidedly after Chairman Jerome Powell said at his press conference that 50 basis points or 75 basis points were most likely at the next meeting in July. but that he didn’t expect 75 basis point hikes to be common.

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“Once the Fed Chairman said there could be a similar 75 basis point increase at the next meeting, that’s when the market went up,” Sam Stovall said. , chief investment strategist at CFRA Research in New York.

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

The Dow Jones Industrial Average (.DJI) rose 303.7 points, or 1%, to 30,668.53, the S&P 500 (.SPX) gained 54.51 points, or 1.46%, to 3,789 .99 and the Nasdaq Composite (.IXIC) added 270.81 points, or 2.5%, to 11,099.16.

The five-game losing streak for the S&P 500 was its longest since early January.

Investors had quickly raised their expectations that the central bank would raise rates by 75 basis points (bps) in the past few days after a stronger than expected consumer price reading on Friday. It had already been widely anticipated that the Fed would announce a 50 basis point hike, a rapid shift in expectations that sparked a sharp selloff in global markets. Read more

Fueling the expectation of a bigger hike were shifts in forecasts from analysts at major banks, including those at JP Morgan and Goldman Sachs, both of which had forecast a 75 basis point rate hike by the Fed. Investors have since rushed to reprice their bets. Read more

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

On Monday, the benchmark S&P 500 index (.SPX) marked a drop of more than 20% from its most recent closing high, confirming that a bear market began on January 3, according to a commonly used definition.

Earlier economic data on Wednesday showed U.S. retail sales unexpectedly fell 0.3% in May as motor vehicle purchases fell amid shortages and record oil prices. petrol drove spending away from other goods, well below expectations calling for a 0.2% rise. Read more

“Most of the additional data points have been negative, even this morning the retail sales numbers were weak, so over the last four business days you’ve had a number of negative economic numbers,” Ellen Hazen said. , Chief Market Strategist, FLPutnam Investment. Management in Wellesley, Massachusetts.

Among individual stocks, Citigroup (CN) rose 3.52% and is a top performer in the S&P 500 Banks Index (.SPXBK) which gained 1.60%. Nucor Corp (NUE.N) rose 2.41% after forecasting an upbeat profit for the current quarter on strong demand for steel.

Boeing Co (BA.N) jumped 9.46% after China Southern Airlines Co Ltd (600029.SS) carried out test flights with a 737 MAX plane for the first time since March, a sign that the return of China plane could approach as demand rebounds. Read more

Volume on U.S. exchanges was 13.40 billion shares, compared to an average of 11.79 billion for the full session over the past 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 2.80 to 1; on the Nasdaq, a ratio of 2.78 to 1 favored advancers.

The S&P 500 posted 1 new 52-week high and 41 new lows; the Nasdaq Composite recorded 12 new highs and 258 new lows.

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Additional reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Aurora Ellis

Our standards: The Thomson Reuters Trust Principles.

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