Traders work on the floor of the New York Stock Exchange (NYSE) in New York, USA, June 13, 2022. REUTERS / Brendan McDermid / File Photo
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- The Fed announced the largest interest rate increase since 1994
- Powell: Don’t expect 75 bps to be the norm
- The S&P 500 broke a five-session losing streak
- Dow 1%, S&P 500 up 1.46%, Nasdaq 2.50%
NEW YORK, June 15 (Reuters) – The S&P 500 rose on Wednesday to halt the loss of five sessions following a Federal Reserve policy statement that raised interest rates to market expectations as the central bank sought to fight rising inflation without causing a recession.
The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its biggest increase since 1994, and predicts a slowdown in the economy and rising unemployment in the coming months. Read more
Shares were volatile after the announcement, before rising sharply after President Jerome Powell told a news conference that either 50 basis points or 75 basis points were likely at the next meeting in July, but that he did not expect increases of 75 basis points to be common.
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“After the Fed chairman said there could be a similar increase of 75 basis points at the next meeting, then the market rose,” said Sam Stoval, chief investment strategist at CFRA Research in New York.
“It’s like a vote of confidence that the Fed has finally woken up to the inflation problem and is ready 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) rose 54.51 points, or 1.46%, to 3,789.99, and the Nasdaq Composite (.IXIC.81) added 12 2.5% points to 11,099.16.
The five-session losing streak for the S&P 500 was the longest since early January.
Investors quickly raised expectations that the central bank will raise interest rates by 75 basis points (bps) in the last few days after stronger-than-expected consumer price reporting on Friday. Earlier, it was expected that the Fed would announce an increase of 50 basis points, a rapid change in expectations, which caused a forced sale on world markets. Read more
Fostering expectations of a larger rise were changes in the forecasts of analysts from major banks, including those at JP Morgan and Goldman Sachs, who both predicted an increase in interest rates by 75 basis points from the Fed. Since then, investors have rushed to re-evaluate their bets. Read more
Rising worries about rising inflation, higher borrowing costs, slowing economic growth and corporate profits have kept stocks under pressure for most of the year.
On Monday, the benchmark S&P 500 (.SPX) fell more than 20% since its last record high, confirming that the bear market began on January 3, according to a commonly used definition.
Earlier economic data on Wednesday showed that retail sales in the US unexpectedly fell by 0.3% in May, as motor vehicle purchases fell amid shortages and record high petrol prices withdrew costs from other goods, much less than expected, requiring an increase of 0.2%. Read more
“Most of the rising data points were negative, even this morning the retail sales were soft, so in just the last four business days you’ve had a number of negative economic numbers,” said Ellen Hazen, chief market strategist, FLPutnam Investment Management in Wellesley. , Massachusetts.
Among individual stocks, Citigroup (CN) rose 3.52% as one of the best performers in the S&P 500 (.SPXBK) banking index, which rose 1.60%. Nucor Corp (NUE.N) rose 2.41% after forecasting an optimistic profit for the current quarter in strong demand for steel.
Boeing Co (BA.N) rose 9.46% after China Southern Airlines Co Ltd (600029.SS) conducted test flights with the 737 MAX for the first time since March, indicating that the return of the aircraft to China could is approaching as demand recovers. Read more
The volume of stock exchanges in the United States is 13.40 billion shares, compared to an average of 11.79 billion for the entire session over the past 20 trading days.
Advanced emissions outperform NYSE declining emissions by 2.80 to 1; of the Nasdaq, a ratio of 2.78 to 1 favors the advanced.
The S&P 500 publishes 1 new 52-week highs and 41 new lows; The Nasdaq Composite recorded 12 new highs and 258 new lows.
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Additional reports from Bansari Mayur Kamdar in Bengaluru; Edited by Aurora Ellis
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