US Stocks Rise Nearly 3% After Fed Rejects Possible 75-Point Rate Hike

US Wall Street stocks closed sharply higher on Wednesday after the Federal Reserve (Fed) ruled out that he is going to make rate hikes of 0.75% or 1%.

This rise followed a press conference by US central bank president Jerome Powell, who calmed investors by saying that central bankers were not considering exceptionally large increases in interest rates.

Stocks initially wavered after the announcement, then indices strengthened. The S&P 500’s advance of nearly 3% was the strongest since May 18, 2020.

The dow jones Industrial Average rose 932.27 points, or 2.81%, to 34,061.06, the S&P 500 gained 124.69 points, or 2.99%, to 4,300.17 and the Nasdaq Composite rose 401.10 points, or 3.19%, to 12,964.86.

The Federal Reserve raised its benchmark overnight interest rate by half a percentage point on Wednesday and said it would start cutting the central bank’s $9 trillion asset portfolio next month in an effort to further reduce inflation.

The US central bank set its target fed funds rate at a range between 0.75% and 1% in a unanimous decision, and further increases in borrowing costs of perhaps a similar magnitude are likely to follow.

“It is clear that they (the fed) understand the need to contain rising pricessaid Greg Bassuk, CEO of AXS Investments in Port Chester, New York.

“Even when the Federal Reserve gets more aggressive on rate hikes, we still have to deal with geopolitical tensions, ongoing COVID issues and these broad corporate earnings results. So, despite the movement of the fedwe believe that we will still see some more volatility in the future”, he added.

With information from Reuters