NEW YORK (AP) — Wall Street stock indexes rose broadly Wednesday afternoon after the release of minutes from the Federal Reserve’s most recent interest rate policy meeting.
The rally, which followed a mostly choppy sequence of trades, came as investors pored over the minutes from earlier this month’s meeting in hopes of gaining further insight into central bank officials’ thinking. as the Fed raised interest rates, among other measures, in an attempt to rein in the highest inflation in four decades.
The minutes show that most officials at the meeting agreed that half-point increases in the Fed’s short-term benchmark rate “would probably be appropriate” at the next two central bank meetings, in June and July. Such an increase would be double the usual increase.
The S&P 500 was up 1.3% at 3:28 p.m. EST. The Dow Jones Industrial Average rose 262 points, or 0.8%, to 32,188 and the Nasdaq rose 1.9%. The indices are on pace for a weekly gain, despite trading higher and lower this week.
Small business stocks made solid gains, a potential sign that investors had more confidence in the outlook for economic growth. The Russell 2000 rose 2%.
The 10-year Treasury yield, which helps set mortgage rates, slipped to 2.75% from 2.76% on Tuesday night.
The market as a whole remains volatile, with investors nervous about rising inflation and its impact on businesses and consumers. Investors are also concerned about the Fed’s aggressive plan to raise interest rates to fight inflation and hope the Fed won’t act so aggressively to slow the economy to the point of triggering a recession. .
Russia’s invasion of Ukraine in February added even more pressure to already rising energy costs, worsening inflation for both businesses and consumers. Supply chains have tightened further over the past month as China locked down several major cities to combat rising COVID-19 cases.
“The overriding theme, particularly in recent weeks, is that investors are increasingly cautious about economic growth and prospects,” said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth. Management. “That’s one of the main reasons you see the stock market’s inability to get any momentum.”
At the May 3-4 meeting, the Fed raised its key rate by half a percentage point, its most aggressive move since 2000. It also announced further significant rate hikes to come. To control inflation, the Fed wants to curb spending and economic growth by making borrowing more expensive for individuals and businesses.
The minutes revealed that many policymakers agreed that after a rapid series of rate hikes in the coming months, they could “assess the effects” of their rate hikes and, depending on the health of the economy, adjust their policies.
The economy has shown more signs of improvement and financial markets have fallen sharply since the Fed meeting.
The S&P 500 gained ground on Monday, but slipped again on Tuesday, led by further losses in the technology sector. The S&P 500 is coming off a seven-week losing streak that nearly ended the equity bull market that began in March 2020.
Retailers recorded some of the biggest gains after being battered in recent days on fears that soaring inflation could eat away at their profits. Some of those concerns eased after upscale department store operator Nordstrom announced an increase in sales and raised its profit forecast. Its stock jumped 14%.
Tech stocks also helped boost the market. Microsoft rose 1.5%.
Several companies made solid gains after posting strong financial results and giving investors solid guidance, despite battling persistently rising inflation.
Software maker TurboTax Intuit rose 9.1% after raising its profit and revenue forecast for the year. Caleres, owner of Famous Footwear, jumped 29.3% after also raising its profit forecast for the year.
Homebuilder Toll Brothers rose 8.2% after reporting strong profits just a day after the sector stumbled amid a disappointing government report on sales of newly built homes.
Wendy’s jumped 10.4% after Trian Fund Management, which already owns 19% of the company, said it was considering buying the rest of the company.
European markets were up and Asian markets closed mostly higher.
Veiga reported from Los Angeles.
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