Stocks swing after rate hike, Powell comments
US stocks fell in choppy trading on Wednesday afternoon as the Federal Reserve handled another big interest rate hike in its fight against stubborn inflation.
The US central bank raised its benchmark interest rate by 0.75% for the third time in a row, raising the federal funds rate to a new range of 3.0% to 3.25% – its highest level since 2008 – from the current range of between 2.25% and 2.5%.
The Standard & Poor’s 500 Index sank 0.8%, while the Dow Jones Industrial Average tumbled 250 points. The tech-heavy Nasdaq Composite Index was down 0.7%. Meanwhile, the CBOE Volatility Index (^VIX) – a measure of Wall Street’s “fear” – briefly rose above 30 for the first time since July 1.
“Restoring price stability is essential to setting the stage for maximum employment and long-term price stability,” Fed Chair Powell said in his post-meeting speech. “We will continue to do so until we are sure the job is done.”
Activity across the bond market has been in focus following the policy announcements. Treasury yields continued their perilous rise on Wednesday, with the two-year rate-sensitive Treasury exceeding 4.1% – the highest level since 2007. US 10-year bonds held above 3.5%, their highest level since 2011.
“You can only steer the ship into the storm for a long time, but eventually there will come a time when you need to control the openings and with the Fed’s third consecutive rate hike of 75 basis points in the past four months, market participants should be looking at “Overall, today’s policy actions largely reflect the economic background and in order to slow the economy, it is clear that the Fed has to be aggressive.”
Among the factors moving the market on Wednesday was General Mills (GIS), which rose nearly 6% after the company reported better-than-expected quarterly earnings and raised its full-year sales forecast as it benefits from higher prices for breakfast cereal and snack foods. and pet food. .
Beyond Meat (BYND) shares gave up earlier gains after announcing a partnership with Taco Bell (YUM) on its first-to-list collaboration: Beyond Carne Asada Steak. The news came after alternative meat producer Doug Ramsey suspended its COO over his arrest for allegedly biting a man’s nose this weekend in a road rage incident.
Shares of Stitch Fix (SFIX) rebounded nearly 8% after the company reported disappointing fourth-quarter revenue expectations and sales guidance and posted a drop in active customers.
Across the Atlantic, Russian President Vladimir Putin announced a “partial mobilization” of Ukraine and vowed to annex the occupied territories. In a televised message, he described these steps as “urgent and necessary steps to defend Russia’s sovereignty, security and territorial integrity.”
The threat of an escalation of Russia’s war against Ukraine shook the markets. Oil prices rose, with West Texas Intermediate (WTI) crude futures up 2.5% to $86.07 a barrel, and Brent crude up 2.4% at $92.81 a barrel. The dollar rose towards a new record while the euro slid. In the cryptocurrency markets, Bitcoin (BTC-USD) fell below $19,000.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
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