Wall St closes higher after Fed rate hike

  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

US stocks have rallied and the Nasdaq has posted its biggest daily percentage gain since April 2020 as the Federal Reserve raised interest rates as expected and comments by Fed Chairman Jerome Powell reassured investors.

In addition, upbeat quarterly reports from Microsoft Corp and Alphabet Inc provided further encouragement about about the earnings season.

The S&P 500 closed at its highest level since June 8.

The Fed raised the benchmark overnight interest rate by three-quarters of a percentage point.

The move came on top of a 75 basis points hike last month and smaller moves in May and March, in an effort by the Fed to cool inflation.

Powell said in a news conference following the rate announcement that he did not believe the US economy is currently in a recession but that it is softening.

Powell also "didn't automatically say we needed another rate hike," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

"It was a calming statement coming on the heels of a day where you saw some earnings and revenues that were better than expectations, albeit expectations that were very tempered."

The Dow Jones Industrial Average rose 436.05 points, or 1.37 per cent, to 32,197.59, the S&P 500 gained 102.56 points, or 2.62 per cent, to 4,023.61 and the Nasdaq Composite added 469.85 points, or 4.06 per cent, to 12,032.42.

Wednesday's hike was also widely anticipated by investors.

"This was widely expected and encouraging that it was a unanimous decision," said Jack Ablin, chief investment officer and founding partner at Cresset Capital.

"It was well telegraphed and properly balanced against expectations."

Microsoft rose 6.7 per cent after it forecast double-digit growth in revenue this fiscal year on demand for cloud computing services.

Alphabet jumped 7.7 per cent a day after it reported better than expected sales of Google search ads, easing worries about a slowing ad market.

Advancing issues outnumbered declining ones on the NYSE by a 5.27-to-1 ratio; on Nasdaq, a 3.15-to-1 ratio favoured advancers.

The S&P 500 posted one new 52-week high and 30 new lows; the Nasdaq Composite recorded 50 new highs and 107 new lows.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting