Investors fear that excessive interest rate increases by the Federal Reserve could push the economy into a recession.
Wall Street closed higher on Wednesday, boosted by minutes after the Federal Reserve’s latest monetary policy meeting that showed policy makers feel unanimous that the US economy has been too strong as they struggled to rein in inflation without triggering a recession.
Minutes of the FOMC meeting in May, which culminated in a 50 basis point rise in the Fed funds target price — the biggest jump in 22 years — showed most committee members that more of these rate hikes are likely to be “appropriate” in the future. Its next meetings are in June and July.
Consolidation of opinions is a good thing,” said Ross Mayfield, investment strategy analyst at Baird Corporation in Louisville, Kentucky. “There is a lack of uncertainty about what to do in the near term.”
“by the time [the Fed] Until September, they’ll have a lot of economic data to take a step back from there, so they continue to maintain electives,” Mayfield added.
All three major US stock indexes moved earlier in the day amid heightened tensions stemming from business and consumer surveys, economic data and corporate earnings reports pointing to a cold US economy – even as the Federal Reserve prepares to dump a bucket of cold water on it to deal with contracts. High inflation.
Fears that excessive interest rate hikes by the Federal Reserve could push the economy into recession despite evidence that inflation peaked in March have fueled these concerns.
There is some credibility to the idea that inflation does [the Fed’s] Mayfield said. “There is a lull already happening, and financial conditions have tightened over the past month due to the strong dollar and weak stock market.”
On Thursday, the Commerce Department is due to release its second comparison of GDP for the first quarter, which analysts are expected to show a contraction slightly less than the 1.4 percent quarterly decline originally reported.
Friday’s PCE report will follow, which will provide more clues on 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 points, the Standard & Poor’s rose 37.25 points, or 0.95 percent, to 3,978.73 points, and the Nasdaq Composite increased 170.29 points, or 1.51 percent, to 11,434.74 points.
Nine of the 11 major S&P 500 sectors rose, with consumer discretionary shares leading the pack with gains of 2.8 percent.
Amazon.com Inc and Tesla Inc provided the strongest gains for the S&P 500 and Nasdaq, rising 2.6 percent and 4.9 percent, respectively.
Department store operator Nordstrom jumped 14.0 per cent following its upbeat forecast for annual earnings and revenue.
Fast-food chain Wendy’s Co. jumped 9.8 percent after a regulatory filing revealed that shareholder Nelson Peltz was considering a possible takeover of the company.
Nvidia Corp shares fell more than 8 percent in after-hours trading after the company’s second-quarter revenue forecast missed expectations.