DJIA: 34,061.06, up 932.27
S&P 500: 4,300.17, up 124.69
Nasdaq: 12,964.86, up 401.10
Stocks stage rally after Powell comments
U.S. stocks experienced a relief rally on Wednesday as Wall Street digested the Federal Reserve’s (Fed) policy decision. The central bank announced the first 50-basis point (0.50%) rate hike since May 2000 and detailed plans to begin reducing its nearly $9 trillion balance sheet on June 1 as officials work to rein in inflation. Fed Chair Jerome Powell noted that additional 0.50% rate increases remain an option “for the next couple of meetings,” but pacified speculation of an even more aggressive 0.75% hike.
All three major averages capped their first three-day winning streak since March. The Dow climbed 932 points, with its 2.8% percentage gain constituting its sharpest single-session increase since November 2020. The S&P 500 soared 3%, its best showing since May 2020, while the Nasdaq Composite rallied 3.2%. Treasuries strengthened, with the more Fed-sensitive two-year note yield falling 14 basis points (0.14%) to 2.63%. A gauge of the U.S. dollar retreated 0.8%, its steepest drop in two months.
All 11 S&P 500 sector closed in positive territory, with Energy pacing the gains. West Texas Intermediate crude spiked 5.5% to $108.02/barrel after the European Union proposed plans to phase in an embargo on Russian oil. In earnings, Advanced Micro Devices Inc. jumped 9.1% after reporting rising demand from data centers for its chips. Starbucks Corp. surged 9.8% as a number of analysts highlighted strong demand. Lyft Inc. tumbled 29.9% as plans to increase spending to attract drivers fed into soft guidance.
On the data front, a release revealed U.S. services sector growth unexpectedly decelerated in April. Elsewhere, private payrolls increased a smaller-than-anticipated 247,000 during the same period.
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