US stock market rises after Fed rate hike

US stocks rose on Wednesday after the Federal Reserve approved it The largest increase in the interest rate Since 1994 it is likely that moves of this magnitude will not become common.

The S&P 500 rose 54.51 points, or 1.5%, to 3789.99, cutting a five-day losing streak. The Dow Jones Industrial Average added 303.70 points, or 1%, to 30,668.53, and the Nasdaq Composite added 270.81 points, or 2.5%, to 11099.15.

The Fed’s move is his latest effort to suppress inflation By tightening monetary policy. Investors had largely expected the Fed to raise the short-term interest rate by 0.75 percentage point. What some have been worried about heading into Wednesday’s rate decision is that the Fed will have to raise rates more aggressively.

At a news conference following the decision, Federal Reserve Chairman Jerome Powell said Wednesday’s move was an “extraordinarily large step.” He added that he expected an increase of 0.50 percentage points, or 0.75 percentage points, at the Federal Reserve’s meeting in July.

Ultimately, the Fed’s guidance on the direction of interest rates on Wednesday is more important to markets than the size of the rate increase, said Dorian Carrell, Schroders’ fund manager. Uncertainty over monetary policy has been a major driver of volatility this year, helping send the S&P 500 index up on Monday. In the bear market areaor a decrease of at least 20% from the previous high.

“The markets are pricing in the Fed trying to be ahead of the curve and not behind the inflation curve,” said Art Hogan, chief market strategist at National Securities. That helped lift stocks toward Wednesday’s rate decision, Mr. Hogan added.

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Shares were broadly higher, with 10 of the S&P 500’s 11 sectors closing higher.

Technology stocks, which have been among the hardest hit areas of the market this year, were among the biggest gainers.

MicrosoftAnd the

nvidiaAnd the

Amazon.com

And the

Netflix

All of them added about 3% or more.

The Federal Reserve’s interest rate decision was shown on a screen on Wednesday in the New York Stock Exchange floor.


picture:

Brendan McDermid/Reuters

Economically sensitive market areas also rose. Bank shares, which were sold off on investor concerns about slowing growth, rose on Wednesday, with the KBW Nasdaq Bank Index rising 1.6%.

Energy stocks fell, marking a relatively rare dip for the year’s best-performing S&P 500 sector. The S&P 500 energy sector fell about 2.1%.

Meanwhile, US government bonds rose After slipping in recent weeks In a sale that pushed yields to their highest levels in more than a decade. The yield on the 10-year Treasury fell to 3.389% from 3.482% on Tuesday. Yields, which fall as bond prices rise, help set rates for everything from mortgages to federal student loans to auto loans.

Elsewhere, European stocks and peripheral euro zone government bond prices jumped after the European Central Bank held a special meeting on Wednesday to discuss the turmoil in the euro zone. Bond markets in the region.

The European Central Bank has put in place a plan to buy more bonds for weaker eurozone governments under its current bond-buying programme. He tasked European Central Bank staff with accelerating the design of a new instrument that would narrow the differences in borrowing costs across the region, and address the financial imbalances that have long been a problem for the currency union.

“They wanted to make sure that funding conditions didn’t deteriorate too much,” said William Sales, chief investment officer at HSBC Private Banking and Wealth Management. He said the meeting indicated that the ECB was ready to support markets earlier than investors had expected.

The Stoxx Europe 600 Index rose 1.4%, led by banking and insurance stocks. Shares of Italian banks, which hold a large portion of government bonds, suffered as debt prices fell.

Intesa San Paulo

And the

UniCredit

It was among the best performers in the European market on Wednesday.

Where is the inflation of US household budgets most affected? John Hilsenrath of the Wall Street Journal traces the roots of rising prices to see why some sectors are rising more than others. Photo illustration: Laura Kammermann / WSJ

Corrections and amplifications
The Dow Jones Industrial Average was trading at mid-afternoon on Wednesday at 30,669. An earlier version of this article incorrectly said it was trading at 20,639. In addition, Italy’s 10-year government bond yields were flat at 4.111% on Tuesday. An earlier version of this article incorrectly stated that returns settled at 4.067%. (corrected June 15th)

Eric Wallerstein contributed to this article.

Write to Joe Wallace at [email protected] and Akane Otani at [email protected]

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