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U.S. stock markets closed sharply higher on Wednesday after the Fed announced largest single-hike in the short-term lending rate since 1994. The central bank has also reiterated its monetary stances to aggressively fight mounting inflation. All three major stock indexes ended in the green and posted their best daily performance since Jun 2.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 1% or 303.70 points to close at 30,668.53. .Notably, 21 components of the 30-stock index ended in positive territory while 9 in red. The blue-chip index terminated a five-day losing streak.
The tech-heavy Nasdaq Composite finished at 11,099.15, rising 2.5% or 270.81 points due to strong performance of large-cap technology stocks. The tech-laden index is in bear market since Mar 7.
The S&P 500 rose 2.5% to end at 3,789.99. The broad-market index officially entered a bear market territory on Jun 13. The market’s benchmark has terminated a five-day losing run. Nine out of 11 broad sectors of the benchmark index closed in positive zone while two in the red.
The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) rallied 2.3%, 2.8%, 2.3% and 2.1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 9.4% to 29.62. A total of 13.40 billion shares were traded Wednesday, higher than the last 20-session average of 11.79 billion. Advancers outnumbered decliners on the NYSE by a 2.80-to-1 ratio. On Nasdaq, a 2.78-to-1 ratio favored advancing issues.
Fed Hikes Interest Rate In Line With Expectations
In his post-FOMC statement, Fed Chairman Jerome Powell said that central bank has decided to raise the benchmark lending rate by 75 basis points effective immediately. With this, the Fed funds rate increased to 1.5-1.75% compared with 0-0.25% at the beginning of this year.
Powell has hinted that the Fed could raise interest rate by another 50 to 75 basis points in July. According to the “dot plot” – which gives individual Fed members expectations – shows that the median value of the benchmark interest rate to go up to 3.4% at the end of 2022 compared with 1.9% projected in March FOMC.
Fed Chairman has reiterated his commitment to fight inflation aggressively to bring it down near to the central bank’s targeted 2% without forcing the economy to go into a recession. However, the Fed cut its outlook for 2022 GDP growth to 1.7% from 2.85 in March. Unemployment rate, which is currently at 3.6% is expected to climb to 4.1% in 2024. The Fed fund rate to rise to 3.8% at the end of 2023.
The projection for the PCE price index – Fed’s favorite gauge of inflation – raised to 5.25 from 4.35 in March. The core PCE inflation has uplifted to 4.3% from 4.1% in March. However, PCE and core PCE inflation are expected to come down to 2.6% and 2.7%, respectively, in 2023.
Economic Data
The Department of Commerce reported that retail sales fell unexpectedly by 0.3% in May compared with the consensus estimate of a rise of 0.1%. April’s data was revised downward from an increase of 0.9% to 0.7%. The core (excluding auto) retail sales rose 0.5% in May compared with the consensus estimate of 0.7%. April’s data was revised downward from an increase of 0.6% to 0.4%.
Mounting inflation compelled Americans to pull back purchase. Miscellaneous store retailers saw a 1.1% drop in sales, while online stores posted a 1% decline. Bars and restaurants registered a 0.7% increase. Year over year, retail sales were up 8.1%. However, the data was not adjusted with inflation.
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Stock Market News for Jun 16, 2022
U.S. stock markets closed sharply higher on Wednesday after the Fed announced largest single-hike in the short-term lending rate since 1994. The central bank has also reiterated its monetary stances to aggressively fight mounting inflation. All three major stock indexes ended in the green and posted their best daily performance since Jun 2.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 1% or 303.70 points to close at 30,668.53. .Notably, 21 components of the 30-stock index ended in positive territory while 9 in red. The blue-chip index terminated a five-day losing streak.
The tech-heavy Nasdaq Composite finished at 11,099.15, rising 2.5% or 270.81 points due to strong performance of large-cap technology stocks. The tech-laden index is in bear market since Mar 7.
The major gainer of the index was MercadoLibre Inc. (MELI - Free Report) , shares of which jumped 9.1%. MercadoLibre carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 rose 2.5% to end at 3,789.99. The broad-market index officially entered a bear market territory on Jun 13. The market’s benchmark has terminated a five-day losing run. Nine out of 11 broad sectors of the benchmark index closed in positive zone while two in the red.
The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) rallied 2.3%, 2.8%, 2.3% and 2.1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 9.4% to 29.62. A total of 13.40 billion shares were traded Wednesday, higher than the last 20-session average of 11.79 billion. Advancers outnumbered decliners on the NYSE by a 2.80-to-1 ratio. On Nasdaq, a 2.78-to-1 ratio favored advancing issues.
Fed Hikes Interest Rate In Line With Expectations
In his post-FOMC statement, Fed Chairman Jerome Powell said that central bank has decided to raise the benchmark lending rate by 75 basis points effective immediately. With this, the Fed funds rate increased to 1.5-1.75% compared with 0-0.25% at the beginning of this year.
Powell has hinted that the Fed could raise interest rate by another 50 to 75 basis points in July. According to the “dot plot” – which gives individual Fed members expectations – shows that the median value of the benchmark interest rate to go up to 3.4% at the end of 2022 compared with 1.9% projected in March FOMC.
Fed Chairman has reiterated his commitment to fight inflation aggressively to bring it down near to the central bank’s targeted 2% without forcing the economy to go into a recession. However, the Fed cut its outlook for 2022 GDP growth to 1.7% from 2.85 in March. Unemployment rate, which is currently at 3.6% is expected to climb to 4.1% in 2024. The Fed fund rate to rise to 3.8% at the end of 2023.
The projection for the PCE price index – Fed’s favorite gauge of inflation – raised to 5.25 from 4.35 in March. The core PCE inflation has uplifted to 4.3% from 4.1% in March. However, PCE and core PCE inflation are expected to come down to 2.6% and 2.7%, respectively, in 2023.
Economic Data
The Department of Commerce reported that retail sales fell unexpectedly by 0.3% in May compared with the consensus estimate of a rise of 0.1%. April’s data was revised downward from an increase of 0.9% to 0.7%. The core (excluding auto) retail sales rose 0.5% in May compared with the consensus estimate of 0.7%. April’s data was revised downward from an increase of 0.6% to 0.4%.
Mounting inflation compelled Americans to pull back purchase. Miscellaneous store retailers saw a 1.1% drop in sales, while online stores posted a 1% decline. Bars and restaurants registered a 0.7% increase. Year over year, retail sales were up 8.1%. However, the data was not adjusted with inflation.