Wall Street Jumps After Fed Announcements

(Reuters) – The New York Stock Exchange ended sharply higher on Wednesday after a rocky session, as the US Federal Reserve (Fed), as widely expected, announced a half-point rate hike, a measure unheard of since 2000, to fight inflation.

The Dow Jones index gained 2.81% or 932.27 points to 34,061.06 points.

The broader S&P 500 gained 124.69 points, or 2.99%, to 4,300.17 points.

The Nasdaq Composite, in turn, rose 401.10 points (3.19%) to 12,964.86 points.

After seeing moves in both directions, major indices on Wall Street stabilized and then climbed sharply, with Fed Chair Jerome Powell commenting at a news conference.

The S&P 500 posted its strongest daily percentage gain since May 18, 2020.

In a statement following its two-day monetary policy meeting, the Fed said it would raise its key interest rate by half a point and will begin deleveraging its balance sheet in June, which could help fate to bolster the fight against rising inflation.

“It’s clear that (the Fed) understands the need to curb rising prices,” said Greg Bassuk, general manager of AXS Investments, Port Chester, New York.

“Even if the Fed is more aggressive with rate hikes, we are still grappling with geopolitical tensions, COVID-related issues and quarterly results everywhere,” he adds. “So we still see volatility on the horizon.”

Investors closely followed Jerome Powell’s speech for possible new indications about the Fed’s future actions and their timing.

Wall Street has recently been weighed down by fears that the Fed’s more aggressive policies will hurt economic growth, disappointing quarterly results from high-growth companies, the conflict in Ukraine and the health restrictions of COVID-19 in China.

High-growth stocks, including tech gloves, were the biggest victims of market rotation.

All eleven major sectors of the S&P 500 rose Wednesday, most notably the energy sector.

Bank stocks rose 3.5% as two-year US Treasury yields hit a peak not seen since November 2018.

Lyft fell 30% after reporting a quarterly profit that fell short of expectations, amid fears of additional spending.

* The memory of the session in Europe: [.EUFR]


(French version Jean Terzian)

by Echo Wang and Devik Jain