Investors fear overly aggressive interest rate hikes by the Fed could tip the economy into recession.
Wall Street closed higher Wednesday, hours after the Federal Reserve’s latest monetary policy meeting showed policymakers unanimously felt the United States economy was too strong as they grappled with refining without triggering a recession.
The minutes from the Federal Open Market Committee’s May meeting, which culminated in a 50-point-point rise in the Fed funds target rate – the biggest jump in 22 years – showed most of the committee’s members judged that such rate hikes would be “likely. be appropriate ”at its upcoming June and July meetings.
“The idea of uniformity is a good thing,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. “There is a lack of uncertainty about what needs to be done in the near term.”
“By the time [the Fed] As of September, they will have plenty of economic data to make from their move there, so they will continue to maintain optionality, “Mayfield added.
All three major US stock indexes gyrated early in the day amid rising jitters from business and consumer surveys, economic data and corporate earnings reports suggesting a cooling American economy – even as the Fed prepares to tackle a bucket of cold water over decades. -high inflation.
Fears that overly aggressive interest rate hikes by the Fed could tip the economy into recession despite evidence that inflation peaked in March.
“There is some credence to the idea that inflation is doing [the Fed’s] job for them, “Mayfield said. “There is already a cooling happening, and financial conditions have tightened over the last month because of dollar strength and equity market weakness.”
On Thursday, the Department of Commerce is due to release its second take on first-quarter GDP, which analysts expect is expected to show a slight shallower contraction than the 1.4 percent quarterly annualized drop originally reported.
The Personal Consumption Expenditures report will follow on Friday, which will provide further clues regarding consumer spending and whether inflation peaked in March, as other indicators have suggested.
The Dow Jones Industrial Average rose 191.66 points, or 0.6 percent, to 32,120.28, the S&P 500 gained 37.25 points, or 0.95 percent, to 3,978.73 and the Nasdaq Composite added 170.29 points, or 1.51 percent, to 11,434.74.
The S&P 500 rose in nine of the 11 major sectors, with consumer discretionary stocks leading the pack with a gain of 2.8 percent.
Amazon.com Inc and Tesla Inc provided the strongest lift to the S&P 500 and the Nasdaq, rising 2.6 percent and 4.9 percent, respectively.
Department store operator Nordstrom Inc. surged 14.0 percent on the heels of its upbeat annual profit and revenue forecasts.
Fast-food chain Wendy’s Co jumped 9.8 percent after a regulatory filing revealed that shareholder Nelson Peltz was considering a potential takeover bid for the company.
Shares of Nvidia Corp fell more than 8 percent in after-hours trading after the company’s second-quarter revenue forecast missed expectations.
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