Stocks had cut earlier gains after the US Federal Reserve raised interest rates by 25 basis points. It is the first time the US central bank has done this since 2018.
Wall Street was trading slightly higher in the late afternoon session on Wednesday as the benchmarks looked to recoup losses seen in the wake of the Fed hike.
After trading sharply higher in early deals, the Dow Jones Industrial Average shed over 500 points to turn negative. The S&P 500 and Nasdaq Composite also turned lower.
The indexes are however looking up, with the Dow 0.77% and the S&P 500 and Nasdaq both higher at 1.44% and 2.74% respectively.
FOMC raises rates by 25 basis points
Stocks were looking to claw back gains after the initial reaction to the rate hike had investors pile into the selling corner. Notably, though, the market had anticipated the Federal Open Market Committee (FOMC) would raise rates by 25 basis points.
That’s what the committee did by hiking the benchmark rate from 0%–0.25% to 0.25%-0.50%.
After the #FOMC meeting stocks pulled back from earlier gains as traders digest the decision to raise #interestrates a quarter point. The biggest gainers in the Dow 30 are $JPM, $BA and $NKE all up nearly 4%. https://t.co/RcJj3u0j4t pic.twitter.com/IGiuOThFVE
— Yahoo Finance Plus (@yfinanceplus) March 16, 2022
A statement from the Fed noted that US inflation remained “elevated” and continues to reflect supply and demand imbalances related to the pandemic.” Also contributing to the outlook are higher energy prices amid the geopolitical uncertainty in the Ukraine-Russia conflict.
"The implications for the US economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity," read the Fed statement.
FOMC has signaled six rate hikes for 2022, with each of the Fed’s remaining meetings in the year set to see rates go up. Analysts have forecast a consensus rate hike of 1.9% by the end of the year.
In 2023, the Fed would be looking at three rate hikes.
In other markets
Elsewhere in the market, gold prices dipped below $1,900 per ounce before rebounding. Spot gold was poised near $1,916 per ounce, roughly 0.8% down. Meanwhile, oil continued to hover around $95 per barrel following this week’s massive sell-off.
In crypto, Bitcoin slipped from intraday highs around $41,500 to break to lows of $39,680. A rebound looks to be on with BTC-USD currently above $40,100 with gains of 1.5% in the past 24 hours.
Featured Broker
