Shares rose on Wednesday in an intraday turnaround as investors dumped A Raise the interest rate by a quarter of a point from the Fed and focused instead on comments from Fed Chair Jerome Powell acknowledging lower inflation.
The S&P 500 rose 1.05% to end at 4,119.21, reversing an earlier drop of nearly 1%. The Nasdaq Composite added 2% to close at 11,816.32, buoyed by gains in chipmakers after strong earnings from advanced micro devices. Meanwhile, the Dow Jones Industrial Average rose 6.92 points, or 0.02%, to 34,092.96 — after sliding more than 500 points to its lowest levels today.
The latest Fed hike marked a slowdown from December’s half-point increase, giving a nod to investors hoping the central bank will ease its aggressive tightening campaign. And Powell’s comments encouraged them.
“We can now say for the first time that the process of deinflation has begun. We can see that and we’re already seeing it in commodity prices so far,” Powell said at the post-meeting press conference.
However, the central bank gave no real hint of a pause in the increases, maintaining the wording in its post-meeting statement that “continued increases in the target range would be appropriate in order to reach a stance of monetary policy that is sufficiently restrictive to bring inflation back to 2 percent. by the time “.
Powell added in remarks at the press conference that the Fed will need to be on the ropes for some time and that the central bank has more work to do.
“I don’t see any signs yet that the Fed is open to rate cuts for 2023,” said Bill Zoox, portfolio manager at Brandywine Global. “I’m not sure the Fed is even trying a soft landing. While they would never say that, they might prefer the reform aspects of a recession and a proper bear market.”
There have been some recent indications that inflation is declining in the broader economy and the Fed has acknowledged this, saying in its post-meeting statement that it has “modified somewhat but remains elevated”.
Equity indices also got a boost as fourth-quarter corporate earnings largely continued to show resilient earnings. peloton Shares rose 26.5% after the fitness equipment company said Net loss decreased year on year. advanced micro devices The company’s stock rose 12.6% after the semiconductor company You reported outperforming fourth quarter earnings.
Wall Street is coming in from a strong month. The S&P 500 capped its best January since 2019, while the tech-savvy Nasdaq Composite had its strongest January in 22 years.
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