Fed hikes rates by 75 basis points to tame inflation
New York, July 27
Major US stock indices held strong gains on Wednesday after the Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point. The action comes on top of a 75 basis points hike last month and smaller moves in May and March in an effort by the Fed to cool inflation.
Wednesday’s hike was expected by many investors. “This was widely expected and encouraging that it was a unanimous decision,” said Jack Ablin, chief investment officer and founding partner at Cresset Capital. “It was well telegraphed and properly balanced against expectations.”
The Dow Jones Industrial Average rose 112.37 points, or 0.35 per cent, to 31,873.91; the S&P 500 gained 54.29 points, or 1.38 per cent, to 3,975.34; and the Nasdaq Composite added 300.13 points, or 2.6 per cent, to 11,862.71. Stocks were already higher before the Fed announcement, with upbeat quarterly reports from Microsoft Corp and Alphabet Inc lifting the sentiment about the earnings season. Microsoft forecast double-digit growth in revenue this fiscal year on demand for cloud computing services. Alphabet Inc reported better-than-expected sales of Google search ad.
Advancing issues outnumbered declining ones on the NYSE by a 2.65-to-1 ratio; on Nasdaq, a 2.03-to-1 ratio favoured advancers.
The S&P 500 posted one new 52-week high and 30 new lows; the Nasdaq Composite recorded 44 new highs and 95 new lows. — Reuters
