Brokers are immersed in trading as Federal Reserve Chairman Jerome Powells press conference appears on the TV screen of the New York Stock Exchange in Manhattan, New York, USA on the 16th. The Fed announced six more rate hikes this year along with a rate hike, but the stock market jumped sharply. Reuters News 1
The New York Stock Exchange closed higher on the 16th.
As the US Federal Reserve concluded the two-day Federal Open Market Committee on the same day, it announced that it would raise the key interest rate by 0.25 percentage points as expected and that it would raise interest rates at each of the next six FOMC meetings, but the market was not shaken.
In particular, Fed Chairman Jerome Powell, in a press conference after the meeting, emphasized that the US economy is strong enough to absorb austerity shocks, helping to allay investor anxiety.
The New York stock market, which had been on an upward trend, temporarily stalled when the Fed announced six more rate hikes along with rate hikes at 2 p.m. on the same day.
The Dow Jones Industrial Average turned to a downtrend, while the Standard & Poors 500 Index and Nasdaq Index also narrowed their gains significantly.
However, at 2:30 PM, Chairman Powell started the press conference, and the tide changed.
Chairman Powell said that Russias invasion of Ukraine would cause inflation to last longer, signaling that monetary policy would be weighted to contain inflation. However, he stressed that the US economy is strong enough to withstand such a shock.
Powells assessment of the U.S. economy was robust, causing stock prices to soar.
According to CNBC, the Dow rose 518.76p to 34,063.10, and the SP500 rose 95.41p to 4357.86.
The Nasdaq index, which focuses on technology stocks, rose 487.93 points, ending the day at 13,436.55.
The Russell 2000 Index, made up of 2,000 small and mid-cap stocks, also surged more than 3.1% to close at 2030.72.
The volatility index, also known as the Wall Street fear index, fell sharply. On the Chicago Options Exchange, it fell 3.16 points to 26.67.
By sector, 9 out of 11 sectors in the SP500 index rose all at once, except for the energy sector, which fell 0.43% amid weak oil prices, and the utility sector also closed at 0.17%.
In particular, the discretionary consumer goods sector surged 3.35%, recording the highest rise, and the financial sector, the beneficiary of the Fed rate hike, also surged 2.88%.
The technology sector and the telecommunication service sector surged 3.32% and 2.93%, respectively.
The stock market was initially swayed by prospects of an aggressive Fed rate hike, but has since changed its mind.
Expectations have risen that the Feds aggressive tightening will eventually benefit the stock market by lowering the risk of catastrophic inflation in the economy in the long run.
Looking at the SP500 index flow since 1946, the analysis that the stock market was on an upward trend during the interest rate hike period, although the interest rate did not change or the intensity was weak compared to the period when the interest rate was lowered, also boosted investor sentiment.
The yield on the 10-year U.S. Treasury note, the benchmark for market interest rates, surged due to the rate hike. It rose 0.08%p and jumped to 2.24%, the highest since 2019.
On the other hand, oil prices continued to decline.
As Ukraine and Russia resumed the fourth round of negotiations on the same day, hopes for a deal have lowered oil prices.
Brent crude, the international oil price benchmark, fell 2.35% to $97.56 a barrel, and West Texas crude, the benchmark US oil price, closed at $95.04 a barrel, down 1.45%.
Metal prices were mixed.
Gold·palladium prices fell, but silver·copper·platinum prices rose.
As of 4:33 p.m. Eastern time, gold is trading at $1925.20 an ounce, down $4.50 an ounce, and palladium is trading at $2,395, down $17 an ounce.
On the other hand, silver futures rose by $0.052 to $25.21 and copper rose by $0.117 to $4.63. Platinum price rose by 18.70 dollars to record 1021.20 dollars.