Hand in hand with the Nasdaq, Wall Street jumps up to 2% due to lower prospects for rate hikes

Wall Street operates with gains led by the technology sector this Thursday, March 23, after the Federal Reserve raised the rate by 25 points but hinted that the US central bank would pause raising rates after the turmoil in the banking sector.

In this way, the Nasdaq takes off almost 2% at 11,889.33 points; followed by the S&P500 by 1.1% to 3,981.70 points. Finally, the Dow Jones advances 0.8% to 32,309.81 points.

The expectations of lower interest rate increases have an impact on the profitability of US debt. Interest on the 2-year United States bond -more sensitive to expectations about reference rates- fell to 3.95%, while that of 10 years fell to 3.48%.

These movements favored large technology companies and stocks such as Apple, Microsoft or Amazon rose around 2%.

Investors continued to watch the price of US regional banks. First Republic Bank was up 4% as was the Western Alliance at 5.3%. However, the Pacwest Corp is down -2%.

The US central bank announced an increase in interest rates of 0.25 points, which places it between 4.75% and 5%, in the midst of the crisis caused by the collapse of two banks in the country and the rescue of a third. This is the ninth rise in rates in a year to combat inflation, although it is less than anticipated by the Fed, which had spoken of accelerating the rate of increases when the banking crisis had not yet broken out.

The Fed’s Federal Open Market Committee (FOMC), which made the decision after a two-day meeting, said that “America’s banking system is healthy and resilient.”

“Recent events are likely to result in tighter credit conditions for households and businesses, weighing on economic activity, hiring and inflation. The extent of these effects is uncertain. The committee remains closely attentive to downside risks inflation,” the statement said.

Fed Chairman Jerome Powell said they will continue to closely monitor conditions in the banking system and use “all necessary tools” to protect it. “Our banking system is healthy, resilient, with strong capital and liquidity,” he said.

During his speech he also pointed out that a rate cut this year was not part of the central bank’s “benchmark expectation.”

Investors were almost evenly split on the decision that the Fed will make at the meeting that will be held in Mayif it will pause or if it will increase the price of money by another 25 basis points.

“Markets are hoping they have one more interest rate hike left, probably,” said Robert Pavlik of Dakota Wealth in Fairfield, Connecticut.