Shares have risen sharply as the central bank raises interest rates

U.S. stocks rose in a volatile session and touched a three-year high almost officially after the Federal Reserve officially announced It will raise interest rates For the first time since 2018.

Key indices rallied in the open, adjusted their gains after the federal announcement, and then ran to close the session near the day’s high.

The S&P 500 was up 95.41 points, or 2.2%, at 4357.86. The broader stock market volume has risen 4.4% in the last two trading days, the biggest two-day gain since April 2020. The technology-focused Nasdaq Composite was up 487.93 points, or 3.8%, at 13436.55, the best day since November. 2020. The Dow Jones Industrial Average rose 518.76 points, or 1.5%, to 34063.10.

The central bank has raised interest rates by a quarter of a percentage point, and new forecasts show that most officials expect the Fed-rate to rise to a low of 1.875% by the end of the year and 2.75% by the end of 2023. Indicates the total Increases by seven-quarters of a point This year and next.

The central bank’s interest rate hike on Wednesday marked a turning point Historical wave of stimuli Passed when the Govt-19 epidemic first spread in the United States, the epidemic stalled the bull market in stocks for years and plunged the economy into recession. This stimulus helped the economy recover faster than many expected and take the stock market to new heights. Now, investors are facing a different challenge: inflation is at a 40-year high. Some are equivalent Worrying about the growing recession.

“It looks like they want to send a message that we are fighting inflation, and they are going to fight it quickly and bring it under control,” said Kathy Jones, chief sustainable strategist at the Swap Center for Financial Research.

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The prospect of a central bank interest rate hike has shaken markets for months, however investors have taken the announcement gradually. The Nasdaq Composite is now on track for its long bear market after the financial crisis. The S&P 500 is down about 9% from its highs.

The central bank is leading an unusually complex environment, such as a tight labor market, supply disruptions, and cyclical inflation. Russia’s invasion of Ukraine And Covit-19 locking in China-The latter two are likely to exacerbate inflation and supply chain problems.

Bond returns increased after the announcement. Benchmark 10-year Treasury paper yields rose to 2.185%, the highest level since May 2019. Yields and prices move in the opposite direction. Russia’s invasion of Ukraine reflects growing challenges from investors Does not slow down towards higher interest rates.

U.S. retail data for February Showed increased cost Corona virus cases are falling and inflation is running high, with families adapting to a strong labor market crossover from the previous month. At the highest annual rate in 40 years.

Shares of technology and development companies have been hitting high in recent months, especially in Wednesday’s trading, which has left some traders confused. Technology and growth stocks are the most sensitive on the path to interest rate hike, and some traders believe that Mr. They described Powell’s position as more aggressive than they had initially expected.

Some investors have aggressively lowered these levels since the beginning of this year, while bond yields have risen, which some traders said would set a reversal sector.

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“I thought it was a little more hawkish than expected,” RJ Grant, director of stock trading at KBW, said at the central bank’s announcement and press conference. But he said the stabilization “was eliminated by the end of the federal period.”

The technology sector of the S&P 500 performed well, gaining 3.3%. Shares

ARK Innovation ETF

$ 5.65, or 10%, to $ 60.04.

Nvidia

The stock was up $ 15.23 or 6.6% at $ 244.96.

PayPal

$ 7.46, or 7.4%, added to $ 107.92.

Traders work on the New York Stock Exchange.


Photo:

Xinhua / Zuma Press

In the commodities market, oil prices have fallen below $ 100 a barrel in recent days, helping the stock market rise again. Oil moves were halted on Wednesday as investors weighed in on whether locking up in some Chinese cities would reduce energy demand, despite Russia’s invasion of Ukraine reinforcing supply disruptions. Internationally, Brent crude futures fell 1.9% to $ 98.02 a barrel, the third consecutive day of losses.

Oil prices have sparked concerns that the United States and Europe could see sustained inflation and lower economic growth as higher gas and energy prices eat up household spending on other goods and services.

The rally in technology stocks was not the only one in which American technology stocks were at the forefront Blisters are re-emerging in Chinese markets After favorable comments from Beijing policymakers. Hong Kong’s Hong Cheng Index rose 9.1%, leading by gains in technology stocks. China’s Shanghai joint rose 3.5%.

Chinese officials said in a statement on Wednesday that China’s state news agency Xinhua “will coordinate epidemic prevention and control and economic growth to keep the economy operating within a reasonable range and keep the capital market running smoothly.” This has helped alleviate some fears about China’s recession, which could slow global growth.

Grainshares CSI China Internet ETF rose 40% after falling to its lowest level at the start of the week, recording its biggest one-day gain since starting trading in 2013.

“The bounceback in Chinese stocks shows how sensitive the markets are,” said Peter Cornry, head of Saxo Bank’s stock strategy, noting the widespread fluctuations in the markets in recent weeks as investors look at the headlines of a number of events.

Overseas, the Pan-Continental Stoxx Europe 600 rose 3.1%, a breakthrough in its technology sector. Russia’s stock market Is covered Throughout the week.

– Joe Wallace contributed to this article.

The main tool of the Federal Reserve to manage the economy is to change the federal-financial ratio, which will not only affect the cost of borrowing for consumers, but will shape the broader decisions of companies as to how many people to hire. The WSJ explains how the Fed handles this one ratio to guide the entire economy. Description: Jacob Reynolds

Write to Caitlin Ostroff at [email protected]

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