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Wall Street rallies to close higher after Fed statement

Economy Jun 15, 2022 07:21PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 13, 2022. REUTERS/Brendan McDermid/File Photo
 
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By Chuck Mikolajczak

NEW YORK (Reuters) - The S&P 500 rallied on Wednesday to snap a five-session losing skid after a policy announcement by the Federal Reserve that raised interest rates to market expectations as the central bank seeks to fight rising inflation without sparking a recession.

The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its biggest rate hike since 1994, and projected a slowing economy and rising unemployment in the months to come.

Equities were volatile after the announcement, before decidedly turning higher after Chair Jerome Powell said in his press conference that either 50 basis points or 75 basis points were most likely at the next meeting in July but that he did not expect hikes of 75 basis points to be common.

"Once the Fed chairman said that there could be a similar 75 basis point increase at the next meeting, that's when the market rose," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"It is sort of a vote of confidence that the Fed is finally awake to the inflation problem and is willing to take a more aggressive stance."

The Dow Jones Industrial Average rose 303.7 points, or 1%, to 30,668.53, the S&P 500 gained 54.51 points, or 1.46%, to 3,789.99 and the Nasdaq Composite added 270.81 points, or 2.5%, to 11,099.16.

The five-session losing streak for the S&P 500 was its longest since early January.

Investors had quickly raised their expectations that the central bank would hike rates by 75 basis points (bps) over the past several days following a stronger than expected reading of consumer prices on Friday. It had previously been widely anticipated the Fed would announce a raise of 50 bps, a rapid swing in expectations that has triggered a violent selloff across world markets.

Fueling the expectation for a larger hike were forecasts changes by analysts at major banks, including those at JP Morgan and Goldman Sachs (NYSE:GS), which both projected a 75 bps rate hike by the Fed. Investors have since rushed to reprice their bets.

Growing worries about surging inflation, higher borrowing costs, slowing economic growth and corporate earnings have kept equities under pressure for most of the year.

On Monday, the benchmark S&P 500 marked a more than 20% decline from its most recent record closing high, confirming a bear market began on Jan. 3, according to a commonly used definition.

Earlier economic data on Wednesday showed U.S. retail sales unexpectedly fell 0.3% in May as motor vehicle purchases declined amid shortages and record high gasoline prices pulled spending away from other goods, well short of expectations calling for a 0.2% rise.

"Most of the incremental data points have been negative, even this morning the retail sales numbers were soft so just in the last four business days you’ve had a number of negative economic numbers," said Ellen Hazen, chief market strategist, F.L.Putnam Investment Management in Wellesley, Massachusetts.

Among individual stocks, Citigroup (NYSE:C) rose 3.52% as one of the best performers on the S&P 500 banks index which gained 1.60%. Nucor Corp (NYSE:NUE) advanced 2.41% after it forecast upbeat current-quarter profit on strong steel demand.

Boeing (NYSE:BA) Co surged 9.46% after China Southern Airlines Co Ltd conducted test flights with a 737 MAX plane for the first time since March, in a sign the jet's return in China could be nearing as demand rebounds.

Volume on U.S. exchanges was 13.40 billion shares, compared with the 11.79 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 2.80-to-1 ratio; on Nasdaq, a 2.78-to-1 ratio favored advancers.

The S&P 500 posted 1 new 52-week highs and 41 new lows; the Nasdaq Composite recorded 12 new highs and 258 new lows.

Wall Street rallies to close higher after Fed statement
 

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Comments (29)
Rul Buz
Rul Buz Jun 16, 2022 12:08AM ET
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The amount of shorts here that are ******ed market didnt go down smh…. 75 rise was already priced in markets wanted some relief and they got it from the statement when inflation starts going down noticebly market will keep rising and have a nice bull run.
Raul A Mollegas
Raul A Mollegas Jun 15, 2022 7:51PM ET
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no sense!!!
충만 배
충만 배 Jun 15, 2022 6:42PM ET
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Pump and dump strategy!
Márcio Ramos
Márcio Ramos Jun 15, 2022 6:42PM ET
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u can do it as well so...
Chad Richer Than You
Chad Richer Than You Jun 15, 2022 6:27PM ET
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Who cares if the prices are high for you?! What matters is that the likes of me make more money!
lubomir firko
lubomir firko Jun 15, 2022 4:24PM ET
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so tomorrow will all this tank 5% ?
Roger Miller
Roger Miller Jun 15, 2022 4:13PM ET
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After seeing the turmoil caused by their errors in judgment remind me we have a central bank trying to centrally plan our economy?
Jay Garrelts
Jay Garrelts Jun 15, 2022 3:56PM ET
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Thank you Donald Trump and Joe Biden for doubling our money supply $8 trillion dollars I was just wondering when my part of its coming?
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Seamus Hackett
Seamus Hackett Jun 15, 2022 3:56PM ET
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Bro they were sending checks to everyone for months. How did u miss?
Brad Albright
Brad Albright Jun 15, 2022 3:56PM ET
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When you get a job.
Jay Garrelts
Jay Garrelts Jun 15, 2022 3:56PM ET
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Seamus Hackett Truthfully I wasn’t worried about what I was getting I was wondering where the other 7.9 trillion dollars went
Jay Garrelts
Jay Garrelts Jun 15, 2022 3:56PM ET
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Roger Miller I agree but I will add there’s no difference between Republicans and Democrats the talk it’s just to confuse and distract and hide the fact that most on both sides are owned by the same people If I’m rich and powerful I’m buying both sides so I win no matter what that’s smart business and if you don’t think that every single person plays that game don’t think that way that’s naïve
Márcio Ramos
Márcio Ramos Jun 15, 2022 3:56PM ET
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Seamus Hackett  Even Austria is doing it now. 1000 EUR for each citizen to fight inflation.
Jim Walsh III
Jim Walsh III Jun 15, 2022 3:45PM ET
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thank Joe Biden for this mess. all those 81 million dupped voters. are you happy now?
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Josh Harvey
Josh Harvey Jun 15, 2022 3:45PM ET
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Trump begging Powell to lower interest rates to zero and spending like a drunken sailor had nothing to do with it. You’re an economic genius.
First Last
First Last Jun 15, 2022 3:45PM ET
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Josh Harvey   Trump BOTH cut taxes (mostly for the rich) AND increased spending
First Last
First Last Jun 15, 2022 3:45PM ET
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You can tell he's very experienced w/ bankruptcies.
Brad Albright
Brad Albright Jun 15, 2022 3:45PM ET
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Duped? BIden is delivering what he promised and dealing with, what is at the moment, a bad hand. I wasn't duped and very happy Trump is not in charge. Speaking of dupes, how about that Election Defense Fund scam Trump pulled to bilk $250 mil from his supporters?
Brad Albright
Brad Albright Jun 15, 2022 3:45PM ET
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Thanks for reminding us of this. Orange one demanded "zero or lower." https://www.foxbusiness.com/markets/trump-federal-reserve-lower-key-interest-rate
James Gomez
James Gomez Jun 15, 2022 3:43PM ET
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Markets rise due to chart technicals more like it. itl dump again and hopefully past previous support
Seamus Hackett
Seamus Hackett Jun 15, 2022 3:43PM ET
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This guys knows TA
ravi bhalani
ravi bhalani Jun 15, 2022 3:30PM ET
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I don't know what is the happiness to lift market 2% !!! next day they will dump and give excuse of rate hike...
 
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