Stocks on Wall Street rose sharply on Wednesday After the Federal Reserve raised its key interest rate by three-quarters of a pointas is widely expected, As the central bank ramps up its campaign to quell rising inflation.
According to preliminary data, the Standard & Poor’s 500 It rose 102.27 points, or 2.58%, to 4023.32 units, while Nasdaq It rose 465.28 points, or 4.02%, to 12,027.86 units. Industry average Dow Jones It advanced 432.05 points or 1.37% to 32,196.00 units.
The Fed’s move, its second hike by three-quarters of points in a row, raises its short-term benchmark rate to the highest level since then. 2018.
Bond yields fell across the board. The two-year Treasury yield, which tends to move according to the Federal Reserve’s forecast, fell to 3.01% from 3.06% on Tuesday. The 10-year yield, which affects mortgage rates, fell to 2.74% from 2.79%.
Wall Street correctly predicted the magnitude of the rally, Which tripled the usual rate and is the fourth rate increase by the Federal Reserve this year.
These increases make loans more expensive, which slows the economy. The hope is that the Fed and other central banks can ingeniously find a middle ground for the economy Slow enough to raise inflation, but not enough to trigger a recession.
Central bank decision happens when Inflation accelerated to 9.1%the fastest annual rate in 41 years.
“With inflation picking up again in June, a 75 basis point hike was certainly warranted, and the Fed did.”said Charlie Ripley, chief investment analyst at Allianz Investment Management. “However, recent economic data presents a greater degree of uncertainty about the course of policy as we move from here.”
Stocks have been volatile this week, After last week’s strong gainsprimarily driven by better-than-expected corporate earnings reports.
however, Inflation remains in the eyes of investors. Markets panicked on Monday after the retail giant Walmart It warned that its profits will be affected by higher prices foods and the gasolinewhich forces buyers to cut back on more profitable discretionary items, such as Clothes.
The retailer’s earnings warning was mid-quarter rare and alarmed How the highest inflation rate in the last 40 years affects the entire retail sector.
Meanwhile, some parts of the economy are already slowing down because the Fed raised interest ratesEspecially in the housing sector. US previously occupied home sales slowed in June for the fifth consecutive month as mortgage rates rose sharply this year. Expectations of higher interest rates generally drove up the 10-year Treasury yield, affecting mortgage rates.
Investors watched the latest batch of corporate earnings reports on Wednesday, including strong earnings from owner Google, the alphabetand based on Microsoft. Investors will know the quarterly results of Ford Motor Company and the parent company of Facebook, meta padsafter closing.
(with information from AP)