Wall Street closes higher after Fed statement

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, USA, on 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 losing streak
  • Dow up 1%, S&P 500 up 1.46%, Nasdaq up 2.50%

NEW YORK, June 15 (Reuters) – The S&P 500 rose on Wednesday to lose five sessions after a Federal Reserve monetary policy announcement that raised interest rates to market expectations as the central bank seeks to fight inflation. growing without provoking a crisis. recession.

The Federal Reserve raised its interest rate target by three-quarters of a percentage point, its highest since 1994, and projected a slowing economy and rising unemployment in the coming months. see More information

Stocks were volatile after the announcement, before definitely rising after Chairman Jerome Powell told his news conference that 50 basis points or 75 basis points were more likely at the next meeting in July, but that he did not expect increases. 75 basis points to be common.

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

“It’s sort of a vote of confidence that the Fed has finally woken up to the problem of inflation and is willing 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 S&P 500’s five-game losing streak was the longest since early January.

Investors quickly raised their expectations that the central bank would raise rates by 75 basis points (bps) in recent days, following a stronger-than-expected reading of consumer prices on Friday. Previously, it had been widely anticipated that the Fed would announce a 50 bps hike, a rapid swing in expectations that triggered a wild sell-off in world markets. see More information

Fueling the expectation of a larger rise were forecasts of changes from analysts at major banks, including those at JP Morgan and Goldman Sachs, who had projected a 75 basis point rate hike by the Fed. Since then, investors have rushed to re-evaluate their bets. see More information

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

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

Earlier economic data on Wednesday showed that U.S. retail sales unexpectedly fell 0.3% in May, as motor vehicle purchases slumped amid shortages and record gasoline prices pushed back spending on other goods as well. below expectations for a 0.2% increase. see More information

“Most of the incremental data points were negative, even this morning the retail sales numbers were weak, so just in the last four business days you’ve had a lot of negative economic numbers,” said Ellen Hazen, chief market strategist at FLPutnam Investment. . Management in Wellesley, Massachusetts.

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

Boeing Co (BA.N) rose 9.46% after China Southern Airlines Co Ltd (600029.SS) conducted test flights with a 737 MAX plane for the first time since March, in a sign that the jet’s return in China may be catching up as demand picks up. see More information

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

Forward issuances outpaced declining issuances on the NYSE by a ratio of 2.80 to 1; on Nasdaq, a 2.78-to-1 ratio favored the forwards.

The S&P 500 recorded 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 Bangalore; Edited by Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

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