Raising interest rates by 0.75 percentage points

US stocks rose on Wednesday after the Federal Reserve implemented its budget The largest increase in the interest rate Since 1994, proposed moves of this magnitude will likely not become popular.

The S&P 500 rose 1.4%. The Dow Jones Industrial Average rose 274 points, or 0.9%, to 20,639, and the Nasdaq Composite increased 2.3%.

The Fed’s move is his latest effort to suppress inflation By tightening monetary policy. Investors had largely expected the Fed to raise the short-term interest rate by 0.75 percentage point. What some have been worried about heading into Wednesday’s rate decision is that the Fed will have to raise rates more aggressively to curb inflation.

At a news conference following the decision, Fed Chair Jerome Powell said Wednesday’s move was an “extraordinarily large step.” He added that he expected an increase of 0.50 percentage points, or 0.75 percentage points, at the Federal Reserve’s meeting in July.

Ultimately, the Fed’s guidance on the direction of interest rates on Wednesday is more important to markets than the size of the rate increase, said Dorian Carell, fund manager at Schroders. Uncertainty over monetary policy has been a major driver of volatility this year, helping send the S&P 500 index up on Monday. In the bear market areaor a decrease of at least 20% from the previous high.

“The markets are pricing in the Fed trying to be ahead of the curve and not behind the inflation curve,” said Art Hogan, chief market strategist at National Securities. That helped lift stocks toward Wednesday’s rate decision, Mr. Hogan added.

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Shares were broadly higher, with nine of the 11 S&P 500 sectors gaining in the afternoon.

Technology stocks, which have been among the hardest hit areas in the market this year, were among the biggest gainers. MicrosoftAnd the nvidiaAnd the Amazon.com And the Netflix They each added more than 2% each.

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