Wall Street Closes Higher Following Fed’s Hint Of Future Lower Hikes
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
U.S. stocks rebounded after the Federal Reserve raised interest rates by 75 basis points and signaled that the next hike would be far lesser.
This would be the fourth consecutive hike of that magnitude from the Reserve Bank as it battles with surging inflation. The central bank is also mindful of the impact of consistently high rate hikes on the economy. As a result, it is considering lowering the next interest rate increase to a respectable level.
Investors Hoped That The Fed Will Downsize On Rates
Investors have been widely anticipating a 75 basis point rate hike but hoped that the Fed would come down and be willing to downsize the rate hikes at the December meeting.
Senior investment strategist at All spring Global Investments, Brian Jacobson, said the Fed is gradually agreeing that the high rate increase has become enough, and it might be better to slow things down.
“You can’t keep popping pills until you feel better. Sometimes you have to wait for the medicine to take effect,” he added.
Nasdaq Composite grew by 0.12% to add 12.89 points while the S&P 500 gained 13.5 points. In addition, the Dow Jones Industrial Average grew by 0.68%, adding 220.81 points in the process.
Before the policy announcement, the S&P has performed poorly after the ADP National Employment report revealed that U.S. private payrolls surged more than expected last month. This was one of the reasons the Fed had to continue on the aggressive rate hike.
Investors Monitor U.S. Monthly Job Openings
The report came after data showed an increase in U.S. monthly job openings, which indicated that the labor demand had remained strong.
The labor market will continue to draw the interest of investors as they look for weekly jobless claims that may help to drive expectations for interest rate hikes.
About 70% of S&P companies have already reported their earnings for the third quarter. The reports showed an increase in growth estimates from 4.7% to 4.8%.
Also, Advanced Micro Devices Inc surged after it reported improvements in its data center business, while Airbnb Inc slumped as its quarterly report showed.
