The S&P 500 gained 1.4% to 3,788.25 while the Nasdaq Composite rose 2.5% to 11,097.74. The Dow Jones Industrial Average, meanwhile, advanced 1% to 30,654.22 units.
The Fed raised its target interest rate by three-quarters of a percentage point, its biggest increase since 1994, and projected an economic slowdown and rising unemployment in the coming months.
Stocks were volatile after the announcement, before rise sharply after Fed Chairman Jerome Powell said in his press conference that a hike of 50 basis points or 75 basis points was most likely at the next meeting in July, but that he did not expect hikes of 75 points out of the ordinary.
“Once the Fed chief said there could be a similar 75 basis point hike at the next meeting, that’s when the market rallied,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “It’s like a vote of confidence that it has finally figured out the problem of inflation and is willing to take a more aggressive stance.”
Investors in recent days have rapidly raised their expectations that the Fed would raise rates by 75 basis points, following a stronger-than-expected consumer price reading on Friday. Earlier they anticipated a 50 basis point hike, a rapid shift in expectations that triggered a violent sell-off in global markets.
Concerns about rising inflation, higher borrowing costs and growing challenges to economic expansion have weighed on global equities.
The benchmark S&P 500 ended Monday racking up more than a 20% drop from its all-time closing high on Jan. 3, confirming that it has been in a bear market, by a commonly used definition.
Citigroup was one of the best performers in the S&P 500 banking index, while Nucor Corp gained after forecasting upbeat earnings for the current quarter on strong steel demand.
Source: Ambito
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