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Wall Street closed sharply higher on Wednesday after the Fed raised interest rate in expected line. Some good news from the Russia-Ukraine war front and cool down of crude oil prices also boosted market participants’ confidence. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) surged 1.6% or 518.17 points to close at 33,063.10. Notably, 20 component of the 30-stock index ended in green while 10 finished in negative zone. The major gainer of the blue-chip index was The Boeing Co. (BA - Free Report) , which gained 5.1%. Boeing carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 13,436.55, jumping 3.8% or 487.93 points due to the strong performance of large-cap technology stocks. This market the best single-day performance by the tech-laden index since Nov 4, 2020.
Meanwhile, the S&P 500 climbed 2.2% to end at 4,357.86. Nine out of 11 broad sectors of the benchmark index closed in positive zone while two in red. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Communication Services Select Sector SPDR (XLC) and the Financials Select Sector SPDR (XLF) advanced 3.3%, 3.4%, 2.8% and 2.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 10.6% to 26.67. A total of 15.82 billion shares were traded on Wednesday, lower than the last 20-session average of 14.04 billion. Advancers outnumbered decliners on the NYSE by a 3.78-to-1 ratio. On Nasdaq, a 3.79-to-1 ratio favored advancing issues.
Fed Raises Interest Rate
The Fed announced after the completion of its 2-day FOMC meeting that it will raise the benchmark interest rate by 25 basis points effective immediately. The Fed funds flow rate will now hike to the range of 0.25-0.50% from 0-0.25% set by the central bank on March 2022 to combat the pandemic.
Fed’s dot-plot, a graphic representation of the views individual Fed officials, indicated that six more rate hike of same magnitude will come this year followed by another three in next year. The Fed projected that the benchmark interest rate to be around 1.9% by this year end.
Moreover, the quantitative easing program of buying $120 billion of bonds per month will terminate this month. Additionally, the Fed Chairman Jerome Powell indicated that the central bank will start shrinking its $9 trillion balance sheet, most consist of U.S. treasury Notes and mortgage-backed securities from May 2022. This will result in another form of rate hike.
In the post-FOMC press conference, Powell said “We are attentive to the risks of further upward pressure on inflation and inflation expectation. The committee is determined to take the measures necessary to restore price stability. The U.S. economy is very strong and well-positioned to handle tighter monetary policy.”
The Fed dropped the U.S. GDP growth rate for 2022 to 2.8% from an estimated 4% in December 2021. The core PCE price index – Fed’s favorite inflation gauge – has been estimated upwardly to stay at around 4.1% in 2022. The index is expected to decline to 2.7% and 2.3% in next two years before attaining the Fed’s long-term target rate of 2%. Unemployment rate is estimated to be around 3.5% in 2022.
Positive Development on Russia-Ukraine Conflict
Several news agencies have reported that Russia and Ukraine have made achieved significant progress in their fourth round of discussion to solve the geopolitical conflict. Ukrainian President Volodymyr Zelenskyy said that a peace agreement looks more realistic now. Russian Foreign Minister Sergey Lavrov told there was “some hope of reaching a compromise.”
Economic Data
The Department of Commerce reported that retail sales rose by 0.3% in February compared with the consensus estimate of 0.4%. January’s data was revised upward from 3.8% to 4.9%. However, year over year, retail sales jumped 17.6% in February. Core retail sales (excluding auto) rose 0.2% in February compared with the consensus estimate of 0.9%. January’s data was revised upward from 3.3% to 4.4%.
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Stock Market News for Mar 17, 2022
Wall Street closed sharply higher on Wednesday after the Fed raised interest rate in expected line. Some good news from the Russia-Ukraine war front and cool down of crude oil prices also boosted market participants’ confidence. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) surged 1.6% or 518.17 points to close at 33,063.10. Notably, 20 component of the 30-stock index ended in green while 10 finished in negative zone. The major gainer of the blue-chip index was The Boeing Co. (BA - Free Report) , which gained 5.1%. Boeing carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 13,436.55, jumping 3.8% or 487.93 points due to the strong performance of large-cap technology stocks. This market the best single-day performance by the tech-laden index since Nov 4, 2020.
Meanwhile, the S&P 500 climbed 2.2% to end at 4,357.86. Nine out of 11 broad sectors of the benchmark index closed in positive zone while two in red. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Communication Services Select Sector SPDR (XLC) and the Financials Select Sector SPDR (XLF) advanced 3.3%, 3.4%, 2.8% and 2.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 10.6% to 26.67. A total of 15.82 billion shares were traded on Wednesday, lower than the last 20-session average of 14.04 billion. Advancers outnumbered decliners on the NYSE by a 3.78-to-1 ratio. On Nasdaq, a 3.79-to-1 ratio favored advancing issues.
Fed Raises Interest Rate
The Fed announced after the completion of its 2-day FOMC meeting that it will raise the benchmark interest rate by 25 basis points effective immediately. The Fed funds flow rate will now hike to the range of 0.25-0.50% from 0-0.25% set by the central bank on March 2022 to combat the pandemic.
Fed’s dot-plot, a graphic representation of the views individual Fed officials, indicated that six more rate hike of same magnitude will come this year followed by another three in next year. The Fed projected that the benchmark interest rate to be around 1.9% by this year end.
Moreover, the quantitative easing program of buying $120 billion of bonds per month will terminate this month. Additionally, the Fed Chairman Jerome Powell indicated that the central bank will start shrinking its $9 trillion balance sheet, most consist of U.S. treasury Notes and mortgage-backed securities from May 2022. This will result in another form of rate hike.
In the post-FOMC press conference, Powell said “We are attentive to the risks of further upward pressure on inflation and inflation expectation. The committee is determined to take the measures necessary to restore price stability. The U.S. economy is very strong and well-positioned to handle tighter monetary policy.”
The Fed dropped the U.S. GDP growth rate for 2022 to 2.8% from an estimated 4% in December 2021. The core PCE price index – Fed’s favorite inflation gauge – has been estimated upwardly to stay at around 4.1% in 2022. The index is expected to decline to 2.7% and 2.3% in next two years before attaining the Fed’s long-term target rate of 2%. Unemployment rate is estimated to be around 3.5% in 2022.
Positive Development on Russia-Ukraine Conflict
Several news agencies have reported that Russia and Ukraine have made achieved significant progress in their fourth round of discussion to solve the geopolitical conflict. Ukrainian President Volodymyr Zelenskyy said that a peace agreement looks more realistic now. Russian Foreign Minister Sergey Lavrov told there was “some hope of reaching a compromise.”
Economic Data
The Department of Commerce reported that retail sales rose by 0.3% in February compared with the consensus estimate of 0.4%. January’s data was revised upward from 3.8% to 4.9%. However, year over year, retail sales jumped 17.6% in February. Core retail sales (excluding auto) rose 0.2% in February compared with the consensus estimate of 0.9%. January’s data was revised upward from 3.3% to 4.4%.