US stocks climb in ‘relief rally’ as Fed’s assesses the economy can withstand multiple rate hikes


Traders work through the closing minutes of trading Tuesday on the New York Stock Exchange floor on February 25, 2020 in New York City.
  • Stocks pushed higher Thursday after the Fed suggested three rate hikes are on tap in 2022.
  • The pace of rate hikes indicates the economy is in shape to take on higher rates to tame inflation. 
  • The Bank of England surprised markets with an interest rate increase. 

US stocks rose Thursday, with investor confidence boosted by the Federal Reserve’s view that the US economy is strong enough to handle three interest rate increases next year. 

The S&P 500 headed back toward a record highs after the Fed on Wednesday signaled it may raise interest rates at least three times in 2022 to cool the hottest inflationary environment in nearly 40 years. 

The Fed, led by Chairman Jerome Powell,  in a statement said there are economic risks from new coronavirus variants. It also said it sees progress on vaccinations and an easing of supply constraints as supporting continued gains in economic activity. 

Here’s where US indexes stood at 9:30 a.m. on Thursday:   

“This appears to be a relief rally, with the market pleased the FOMC and Chairman Powell weren’t even more hawkish than they were.  Presumably, this was the outcome the FOMC was hoping for; prepare the market for a hawkish pivot and avoid significant market disruption when it comes to pass,” said Calvin Norris, portfolio manager and US Rates strategist at Aegon Asset Management, in a note Wednesday. 

In the UK, stocks and the British pound climbed after the Bank of England surprised markets by raising the UK’s benchmark rate to 0.25% from 0.1%, making that move after inflation hit a 10-year high in November.

Around the markets, economist Mohamed El-Erian said some Fed policymakers might be wishing they’d been a bit more aggressive about pulling back on monetary stimulus. 

Reddit, whose message boards became the go-to destination for day traders during this year’s meme stock frenzy, has confidentially filed for an initial public offering in the US

Oil prices rose. West Texas Intermediate crude gained 0.5% to $71.17 per barrel. Brent crude, the international benchmark, picked up 0.4%, at $74.19. 

Gold gained 1.2% to $1,786 per ounce. The 10-year yield edged up 1 basis point to 1.472%. 

Bitcoin fell by 0.8% to $48,487.70. 

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