Stocks extend gains after Fed decision

U.S. stocks jumped Wednesday afternoon as investors considered the Federal Reserve’s latest monetary policy decision. In this, the central bank hiked interest rates 75 basis points, or the most since 1994, and suggested a similar move could take place next month.

The S&P 500 jumped by more than 2% around 2:45 p.m. ET and was on track to end a five-day losing streak. The Nasdaq Composite soared to session highs as Federal Reserve Chair Jerome Powell spoke during his press conference and added as much as 3.5%. The Dow jumped by about 1% intraday.

Treasury yields held lower and the benchmark 10-year yield pulled back from a more than decade-high to hold just above 3.4%. The monetary policy-sensitive two-year yield also pulled back from a 15-year high. Bitcoin prices (BTC-USD) remained in the red after sinking to a fresh Dec. 2020 low of just over $20,000 earlier in the day.

The Federal Reserve opted to raise interest rates by 75 basis points in June, following a 50 basis point rate hike in May. During a press conference Wednesday afternoon, Fed Chair Jerome Powell also said a 50 or 75 basis point rate hike “seems most likely” for the Fed’s next meeting in July, and in doing so implied suggested an even larger interest rate hike of a full percentage point was unlikely in the near-term.

Investors had begun to price in an increased probability of a 75 basis poinnt rate hike over the past several days, after fresh economic data suggested the Fed’s previous, more measured moves on rates had so far done little to address inflation. Consumer prices unexpectedly rose to set a fresh 40-year high in May. And other recent data showed consumers’ inflation near-term expectations have crept to near or all-time highs.

The Fed also increased its inflation forecast for the current year. The median Federal Open Market Committee member sees core personal consumption expenditures (PCE), the Fed’s preferred gauge of underlying inflation, rising by 4.3% in 2022. That compared to an estimate of 4.1% in March, the last time the Fed provided an updated set of projections. For 2023, the Fed…


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