Wall Street welcomes the Fed’s rate hike

According to the final results, the Dow Jones index rose 1.00% to 30,668.53 points, the S&P 500 gained 1.46% to 3,789.99 points, and the tech-heavy Nasdaq rose 1.00%. 2.50% to 11,099.15 points.

At the end of its finance committee meeting, the Federal Reserve raised its core rates by 0.75 percentage points, to set them within the range between 1.50 and 1.75%. This is the strongest monetary restriction since 1994.

The Fed underlined the seriousness of its mission with the first 75 basis rate increase since 1994, which quickly acted as a hope of accelerating inflationcommented Chris Low, chief economist of FHN Financial.

For the first time in years, the Fed attempts to reverse inflation higher than its targetadded the analyst.

For Peter Cardillo of Spartan Capital, The Fed spoke firmly and the market liked it. Although the bear market will continue for a while, it has responded well and bond yields have fallen after a sharp rise at the start of the week.underlined the analyst.

Fed Chairman Jerome Powell pointed out in his press conference that the economy was still strong and he thought he could achieve a soft landing by shrinking the Fed’s balance sheet and raising ratesadded Mr. Cardillo.

Concerns remain

Personally, I doubt it, I think we’re heading for a pretty difficult landingsaid the analyst, referring to the economic slowdown that financial authorities sought to calm rising prices.

Inflation is rising to 8.6% for a year in the United States and Jerome Powell assured that the Central Bank will determined to return inflation to the 2% target.

Tom Cahill of Ventura Wealth Management also believes it will be difficult to fix a soft landing, i.e., avoid a recession or rising unemployment.

But the market appreciates, he said, the fact that Fed stay open to raise rates by 50 basis points or 75 points at the next meeting in July. This option is welcome, because the market is afraid that the Fed don’t overdo it.

Yields on ten-year U.S. government bonds, which are moving inversely in their price, responded favorably, down 3.29% from 3.47% the previous day, the highest since 2011.

The dollar weakened slightly after sinking on Tuesday. The Dollar index, which compares the greenback to a basket of other currencies, fell 0.77% to 104.70 points. It costs 1.0453 dollars for one euro (-0.34%).

For its part, a very rare fact, the European Central Bank (ECB) held an emergency meeting earlier to quell tensions over differences in borrowing rates between euro zone countries.

Wall Street reacted

The day’s indicators continue to reflect a U.S. economy surprised by rising prices and crippled by supply chain bottlenecks.

Contrary to analysts ’expectations, retail sales in the United States fell 0.3% in May, while consumer purchasing power declined sharply.

As for manufacturing activity in the New York area, as measured by the index Empire State ng Fedit remained contraction in June.

Investors fled cryptocurrencies and bitcoin, a risky asset, which fell to $ 21.566 (-1.82%).

All S&P 500 sectors, except energy, recovered, leading in dispensable consumer spending (+3.02%), followed by the communications sector (+2.36%) and real estate (+2.33%).

Some titles, particularly in distribution, which fell sharply at the beginning of the week, rose sharply, such as online car dealer Carvana (+ 16.78%) or Chewy animal food (+ 8.10%) . Car rental company Hertz, which announced a buyback of its own shares for two billion US dollars, climbed 5.05% while Avis, on the eve of the holiday departures, was accelerated by 7.94%.

The maker of the Moderna vaccine was honored (+5.73% to $ 128.53) after an important step toward vaccinating infants and young children against COVID-19, with a favorable recommendation by experts for its serum authorization as well. of Pfizer (+ 1.23% to $ 48.51).