After the Fed’s announcement, Wall Street gained momentum and closed with solid gains

Traders at the New York Stock Exchange (EFE / Justin Lane)

Stocks rose Wednesday on Wall Street afterwards The largest increase in interest rates by the Federal Reserve since 1994You guarantee that these increases are not common.

Indicator Standard & Poor’s 500Which entered a “bear market” earlier this week after the latest inflation data, rose 1.5% to 3,789.95 points.

Industry average Dow Jones The composite index rose 1% to 30,668.13 points NasdaqRich technology shares rose 2.5 percent to 11,099.15 points.

The Federal Reserve raised its key short-term interest rate by three-quarters of a percentage point, Triple the usualin an attempt to curb high inflation. Powell said the Fed may consider a half-point or three-quarter-point hike at its next meeting in July, before the increases return to normal.

The Fed is serious about inflationsaid Brian Jacobsen, senior investment analyst at Allspring Global Investments. “Instead of trying to let it drop naturally, they want to give it a good boost, even if it means slowing growth.for the economy.

Investments around the world, from bonds until the BitcoinIt declined this year as rising inflation forced the Federal Reserve and other central banks to quickly withdraw support that had supported markets early in the pandemic. The fear is that sharp increases in interest rates will push the economy into recession.

Federal Reserve BankDon’t try to create a recession now, let it be clearPowell said. He said Wednesday’s big increase was more about the Fed accelerating the move to return interest rates to normal than anything else, describing that “front loading“.

Even if central banks carry out the disingenuous trick of slowing the economy down enough to kill inflationwithout producing a file Recessionthe highest interest rates Downward pressure on investment prices after all. The investments that have skyrocketed in the era of easy money with ultra-low interest rates, including high-growth technology stocks and cryptocurrencies, have been hardest hit.

Treasury yields soared to their highest levels in more than a decade on expectations that the Federal Reserve is more robust.Although they relaxed Wednesday after Powell’s comments. This was contributed by a disappointing report showing US retail sales unexpectedly declined in May compared to April. So did a weaker-than-expected report on manufacturing in New York State.

The economy remains largely resilient amid an overheating labor market, but it has shown some signs of difficulty lately. Last week, for example, The preliminary reading of consumer confidence fell to its lowest level, due in large part to higher gasoline prices.

The two-year Treasury yield fell to 3.26% from 3.45% on Tuesday, with the biggest move being after Powell said it was unusual to raise rates by 0.75 percentage points. The 10-year Treasury yield fell to 3.36% from 3.48%.

The bond market is now driving the broader market and it will continue to do so.said Jay Hatfield, CEO of Infrastructure Capital Advisors.

prices Cryptocurrency It continued to decline, with Bitcoin dropping to a low of $20,087.90, almost 71% below the record high of $68,990.90 set late last year. In the afternoon, it was down 2.2% to $21,652, according to CoinDesk.

Its decline worsened as investors raised expectations about the strength of the Federal Reserve to act on interest rates.

Since a week, Hardly anyone expected an increase of three-quarters of a percentage pointWhich is the general forecast this afternoon. With that, a surprising report on Friday sent markets shivering by showing it Consumer inflation accelerated unexpectedly last month.

The data dashes Wall Street hopes that inflation has already peaked, and It appears to be forcing the Federal Reserve to be more aggressive. The Federal Reserve has come under fire for moving too slowly to rein in inflation. Other central banks around the world are also raising interest rates, adding to the pressure.

The Bank of Japan kept interest rates near record lows. This has caused the yen to drop to a two-decade low against the US dollar as traders shift capital in search of higher returns.

The war in Ukraine helped drive up oil prices, as the region is a major energy producer. On the other hand, infections Corona virus disease In China, factories are closing and supply chains are disrupted.

All this contributed to The S&P 500 is down more than 20% from the record set in early JanuaryWhich led Wall Street to what investors paid They call it a bear market.

Markets were more relaxed on Wednesdaywith stocks rising across Europe and parts of Asia.

The Dax Germany gained 1.4% and France’s CAC 40 rose 1.3% after the European Central Bank called an unscheduled meeting to address concerns that higher interest rates could disrupt the market. The central bank did not provide a detailed plan, but said that it would act if necessary against “fragmentation” as bond yields in some European countries rise more than others.

Procedures in Shanghai They gained 0.5% after government data showed Chinese factory activity rebounded in May as anti-virus controls that shuttered businesses in Shanghai and other industrial hubs were relaxed. However, the business flood s Tokyo It fell more than 1 percent.

(With information from Agence France-Presse and the Associated Press)

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US Treasuries recorded their highest yields in the last decade

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