Dow surges after Fed hints at smaller rate hike

U.S. stocks plunged Wednesday after the Federal Reserve hiked interest rates by 75 basis points, recapturing earlier gains but signaling a smaller rate hike may be on the horizon. rice field.

The Dow rose more than 300 points, but fell more than 200 points after Fed Chairman Jerome Powell’s press conference.

In afternoon trading, the Dow Jones Industrial Average plummeted 272 points (0.8%) to 32,381, the S&P 500 fell 1.3% and the Nasdaq fell 1.7%.

of Fed rate hikea fourth straight rise from a central bank stubbornly trying to keep high inflation in check and set the target federal funds rate in the range of 3.75% to 4.00%, a new word that suggests central banks are paying attention. about the impact of the big interest rate hike on the economy.

Investors had widely expected a rate hike of 75 basis points, but hoped the Fed would signal its willingness to start tapering rate hikes at its December meeting.

“The Fed is finally acknowledging that it has already done so much that it would be prudent to slow down the pace of rate hikes,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonie Falls, Wisconsin. maybe,” he said.

“You can’t keep taking medicine until you feel better. Sometimes you have to wait until the medicine works.”

As the S&P 500 fell before the policy announcement, ADP National Employment Report shows US private payrolls rose better than expected in October, giving the Fed more reason to continue aggressive rate hikes.

The private payroll report was released following Tuesday’s data. Monthly job openings skyrocketindicating that labor demand remains strong.

Investors will get a closer look at the labor market in the form of Thursday’s first weekly unemployment insurance claims and Friday’s October payroll report, which will help boost hopes for interest rate hikes.

Nearly 70% of the S&P 500 companies reported earnings for the quarter, so growth estimates rose slightly to 4.8% from 4.7% the day before and 4.5% in early October.

Advanced Micro Devices rose after forecasting some strength in its data center business, but Airbnb tumbled on earnings forecasts for a tough holiday quarter.