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S&P 500 Takes Aggressive Fed Rate Hike Bets in Stride

Stock Markets Mar 22, 2022 02:47PM ET
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By Yasin Ebrahim

Investing.com – The S&P 500 jumped sharply as investors piled into big tech, shrugging off an ongoing rise in yields amid growing expectations for the Federal Reserve to turn more aggressive on rate hikes. 

The S&P 500 rose 1%, the Dow Jones Industrial Average gained 0.6%, or 200 points, the Nasdaq rose 1.8%.

Federal Reserve Bank of St. Louis President James Bullard stressed the need for the Fed to move faster and more aggressively on rate hikes to curb the pace of inflation.

The remarks arrived a day after Fed Chairman Jerome Powell said the central bank would be prepared to hike by more than 25 basis points at upcoming meetings to “ensure a return to price stability.”

Wall Street was quick to price in steeper hikes following Powell’s comments, with Goldman Sachs now forecasting a 50 basis point hike at the Fed’s May and June meetings.

Regional banks paired some of their recent losses helping the broader financials sector rise more than 1% as rising rates boost the net interest margin of banks.

SVB Financial (NASDAQ:SIVB), Wells Fargo (NYSE:WFC), and First Republic Bank (NYSE:FRC) led the move higher.

Growth sectors of the market including tech didn’t waver under the pressure of the rising yields.

Meta Platforms (NASDAQ:FB) Amazon (NASDAQ:AMZN) Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Apple (NASDAQ:AAPL) climbed more than 2%.

Chinese tech stocks were also in the ascendency, supported by a surge in Alibaba Group (NYSE:BABA) after the e-commerce announced boosted its share buyback program to a record $25 billion.

JD.com (NASDAQ:JD) and Pinduoduo (NASDAQ:PDD) also rose on Tuesday.

Tesla (NASDAQ:TSLA), meanwhile, jumped more than 5% after the electric vehicle maker officially opened its Gigafactory in Berlin. The move is expected to boost Tesla’s market share in Europe.

The opening of Giga Berlin “should further vault its [Tesla’s] market share within Europe over the coming years as more consumers aggressively head down the EV path,” Wedbush said in a note Monday.

On the earnings front, Nike (NYSE:NKE), a sizeable Dow Jones index component, rose more than 3% after reporting better-than-expected quarterly results. 

“Recent results and commentary from senior leadership of the company show clearly that NKE is managing well various external headwinds, including ongoing supply chain distributions and geopolitical tensions, across the globe,” Oppenheimer said in a note. “We are optimistic that money will soon flow back into NKE shares.”

Energy stocks gave back some of their gains from a day earlier as oil prices turned negative. But losses were kept in check by fears of an oil supply shortage as the European Union mulls joining the U.S. in banning Russian oil.

S&P 500 Takes Aggressive Fed Rate Hike Bets in Stride
 

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Comments (6)
Andrew Allen
Andrew Allen Mar 22, 2022 4:16PM ET
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"aggressive" everyone today was born 30 years ago I guess
Andrew Allen
Andrew Allen Mar 22, 2022 4:16PM ET
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less than 30
Christos Rousakis
Christos Rousakis Mar 22, 2022 3:24PM ET
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American show only show this is American hahahaha
First Last
First Last Mar 22, 2022 3:24PM ET
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Huh?
taylor jason
taylor jason Mar 22, 2022 3:13PM ET
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there is a typo in your article. BABA share buy back was increased to $25 billion, not $75
taylor jason
taylor jason Mar 22, 2022 3:11PM ET
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rofl tomorrow's article will say, "tech sells off due to rate hike fears"
me ish
me ish Mar 22, 2022 3:11PM ET
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no kidding - that was one big counter rally in a bearish downtrend - new leg down starts tomorrow - and "Tesla (NASDAQ:TSLA), meanwhile, jumped more than 5% after the electric vehicle maker officially opened its Gigafactory in Berlin. The move is expected to boost Tesla’s market share in Europe" - they can make as many cars as they wish, but at the price they're going to have to charge to make a profit, they won't find many buyers when the middle classes are going to be tightening their belts massively just to pay their mortgages and for food and energy. Many more people are going to make do with what they've got for years and pull back hard on discretionary spending.
Peter ONeill
Peter ONeill Mar 22, 2022 3:11PM ET
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Doubt it - the Nasdaq should be around 12,000 right now - the only reason it isn't is there is still $5 Trillion in Fed printed money floating on the sidelines. Until the fed SERIOUSLY gets aggressive on balance sheet sell-off inflation will continue at high levels and the stock market will stay at artificial level with every dip bought
JAMES CUNHA
JAMES CUNHA Mar 22, 2022 3:11PM ET
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This is by far the worse Fed the U.S. had.  The stocks maybe pumping up for no reason at the moment.  However, it will eventually come crashing down.  Not only will people be stuck with losses, they will also have to deal with inflation.
Peter ONeill
Peter ONeill Mar 22, 2022 3:11PM ET
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It's pumping up as the Fed pumped $5 Trillion of new cash into the market which is still sitting on the sidelines waiting to buy any dip. Despite inflation being at 8%, the Fed has increased interest rates by 0.25% in over 2 years. It's like your house is on fire and the Fed's response is to throw more gas on the fire and then say it needs time to consider the data before it starts looking for a water hose to put the fire out..Every dip will be bought and inflation will remain high until the Fed gets very aggressive on taking money off the sidelines by selling off its $9 Trillion balance sheet
JAMES CUNHA
JAMES CUNHA Mar 22, 2022 3:06PM ET
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Of course Wall Street takes "aggressive" Fed Rate hike best in stide... the Fed obviously works for Wall Street?
First Last
First Last Mar 22, 2022 3:06PM ET
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Fed si supposed to be independent and non-partisan, so ... Yes.
 
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