31 C
Wednesday, October 4, 2023

Nasdaq rises 2% on lower Fed rate hike

  • US stocks rose in volatile trading on Wednesday after the Fed raised interest rates 25 basis points.
  • That raises the federal funds rate target to 4.5%-4.75%, the highest since 2007.
  • Fed Chairman Jerome Powell hinted that more hikes are on the way, warning that rates should stay high for “some time.”

US stocks ended a volatile session higher on Wednesday after the Federal Reserve raised interest rates by 25 basis points, further slowing the pace of tightening.

Stocks initially plunged as investors braced for the policy change, with the Dow Jones Industrial Average shedding more than 400 points at one point. Stocks then rose as Fed Chairman Jerome Powell made encouraging comments about inflation.

“Now we can say for the first time that the disinflation process has started,” he said, noting that rates should remain tight for “some time.”

The latest hike brings the federal funds rate target to 4.5%-4.75%, the highest since October 2007. Powell said the Fed would offer another rate hike at the Federal Open Markets Committee meeting in March, where markets are pricing in another 25-basis-point increase, according to the CME FedWatch tool.

Here’s how the US indices fared at the 4:00 pm closing bell on Wednesday:

The Fed has eased the size of its rate hikes as inflation continues to moderate, and Wednesday’s 25 basis point hike is softer than December’s 50 basis point hike, which followed four straight 75 point hikes. basic.

“This second consecutive lower increase serves as evidence that the Federal Reserve is signaling that significant progress has been made in controlling inflation and that we have reached a point where rate increases can be eased further,” Michele said. Raneri, vice president of TransUnion. she said in a statement.

But investors may be overly optimistic as rates could rise more than markets expect, according to Lazard’s chief market strategist Ronald Temple.

“The FOMC announcement indicates that additional rate hikes may be appropriate while markets are pricing in just one more rate hike,” Temple said in a statement. “I think markets are still too dovish on how high rates will go and how long they will stay there. The more markets resist the Fed, the tighter conditions will have to be to control inflation.”

This is what else is happening:

In commodities, bonds and cryptocurrencies:

  • Oil prices were mixed, with West Texas Intermediate down 2.33% to $77.03 a barrel. Brent crude, the international benchmark, rose 0.65% to $83.38 a barrel.
  • Gold rose 0.65% to $1,941.42 an ounce.
  • The 10-year yield plunged 13 basis points to 3.397%.
  • Bitcoin gained 1.92% to $23,546.52.

Related Articles


Please enter your comment!
Please enter your name here

Latest Articles