Stocks jump after Powell signals Fed will stay tough on inflation, Dow snaps 5-day slide
Stocks rallied on Wednesday after the Federal Reserve hiked rates by 75 basis points — its largest increase since 1994 — and signaled it could raise rates by a
Stocks rallied on Wednesday after the Federal Reserve hiked rates by 75 basis points — its largest increase since 1994 — and signaled it could raise rates by a similar magnitude in July, giving investors confidence the central bank was committed to tamping down inflation.
The Dow Jones Industrial Average snapped a five-day losing streak, jumping 303.70 points, or 1%, to close at 30,668.53. The S&P 500 rose 1.46% to 3,789.99 while the Nasdaq Composite gained 2.5% to settle at 11,099.15.
Stocks were volatile after the rate hike decision but jumped to session highs as Fed Chairman Jerome Powell said during his afternoon press conference that, “either a 50 basis point or a 75 basis point increase seems most likely at our next meeting.”
The market had anticipated a 75 basis point rate hike Wednesday, but it was Powell’s willingness to do another hike of that size that surprised markets.
“The more aggressive stance can still be consistent with a softish landing for the economy, but the path is getting narrower,” wrote Barry Gilbert, asset allocation strategist for LPL Financial. “We still think the Fed may be able to back off from its new forecast of a 3.4% benchmark rate at the end of the year, but for now, the priority is showing resolve.”