Nasdaq climbs 2% as US stocks rise after Fed’s small rate hike

  • US stocks rose in volatile trading on Wednesday after the Fed raised interest rates by 25 basis points.
  • This raises the target federal funds rate to 4.5% to 4.75%, the highest level since 2007.
  • Fed Chairman Jerome Powell hinted that more hikes were coming and warned that rates should remain high “for a while”.

US stocks ended a volatile session higher on Wednesday after the Federal Reserve raised interest rates by 25 basis points, continuing to slow the pace of tightening.

Shares initially fell as investors prepared for a policy change, with the Dow Jones Industrial Average losing over 400 points at one point. Stocks then soared after Fed Chairman Jerome Powell’s encouraging comments about inflation.

“Now we can say for the first time that the process of disinflation has begun,” he said, while noting that rates should remain restrictive “for some time.”

The latest increase brought the target federal funds rate to 4.5% to 4.75%, the highest since October 2007. Powell signaled that the Fed would make another rate hike at the March meeting of the Federal Open Market Committee, where markets are pricing in another 25-base rate. point increase, according to the CME FedWatch tool.

Here’s where the US stocks were on the close call at 4:00 pm on Wednesday:

The Fed eased the size of the rate hike as inflation continues to ease and the 25 basis point hike on Wednesday is softer than the 50 basis point hike in December that followed four consecutive 75 basis point hikes.

“This second consecutive lower rate hike is evidence that the Federal Reserve is signaling significant progress in curbing inflation and that we have reached a point where rate hikes can be cut even further,” Michele Raneri, Vice President of TransUnion . says in the statement.

But according to Lazard’s chief market strategist Ronald Temple, investors may be overly optimistic as rates could be higher than markets are expecting.

“The FOMC announcement indicates that an additional rate hike may be appropriate, while markets are pricing in just one more hike,” Temple said in a statement. “I think the markets remain too dovish on how high rates will rise and how long they will stay there. The more markets resist the Fed, the tighter conditions need to be to contain inflation.”

Here’s what else is happening:

In commodities, bonds and cryptocurrencies:

  • Oil prices are traded in different directions: West Texas Intermediate has fallen in price by 2.33% to $77.03 per barrel. Brent crude, the international benchmark, rose 0.65% to $83.38 a barrel.
  • Gold rose 0.65% to $1941.42 an ounce.
  • The yield on 10-year bonds fell 13 basis points to 3.397%.
  • Bitcoin added 1.92% to $23,546.52.

Content Source

News Press Ohio – Latest News:
Columbus Local News || Cleveland Local News || Ohio State News || National News || Money and Economy News || Entertainment News || Tech News || Environment News

Related Articles

Back to top button