Stock market: Wall Street rises, hailing Fed’s anti-inflation resolve

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MARKET OVERVIEW. North American stock markets ended sharply higher on Wednesday, welcoming the US Federal Reserve’s (Fed) determination to rein in inflation after raising interest rates by three-quarters of a percentage point in line with market expectations.

Consult market news (again).

Stock market indices at close of trading

In Toronto, the S&P/TSX rose by 281.88 points (+1.49%) to 19,254.56 points.

In New York, the S&P500 rose by 102.56 points (+2.62%) to 4,023.61 points.

the Nasdaq collected 469.85 points (+4.06%) to 12,032.42 points.

the DOW collected 436.05 points (+1.37%) to 32,197.59 points.

the loons up $0.0036 (+0.4625%) to $0.7800.

the oil rose $3.18 (+3.35%) to $98.16.

L’gold realized $15.00 (+0.87%) to $1,732.70.

the Bitcoin rose from $1,842.46 (+8.79%) to $22,798.92.

the context

The indices had already started the session in the green.

As expected by the markets, the Fed implemented another significant hike (0.75 percentage point) in overnight interest rates, the second in a row of this magnitude, and pushed them into a range of 2.25% to 2.50% to around the Inflation at its highest level in 40 years (9.1%).

The Monetary Affairs Committee (FOMC) has indicated that another “unusually large” rate hike may be required at the next currency meeting in September.

But, according to Fed Chair Jerome Powell during a news conference, “at a certain point it will be appropriate” to slow the rate hike, a nuance that pleased markets.

“There were no surprises, the Fed remained aggressive,” commented Peter Cardillo of Spartan Capital. “They kept saying inflation was too high.”

“But what’s pleasing to the market,” the analyst continued, “is that Mr. Powell said they may slow the pace of hikes going forward, which doesn’t rule out a 50 basis point hike anytime soon.”

Same story from B. Riley Wealth Management’s Art Hogan, who noted that the market “is now considering less aggressive monetary policy as we move from Q3 into Q4.”

Calculations based on CME Group futures now call for a 66% rise by just half a point in September.

Soft landing still possible

As the first estimate of US GDP for the second quarter is due on Thursday, Mr Powell assured that the United States is “not in a recession” at the moment and that it will be a soft landing for the economy without killing the job market still possible to affect very much.

In the bond market, the 10-year Treasury bill yield fell to 2.77% from 2.80% the previous day. The dollar fell against the major currencies (-0.68% for the dollar index at 16:30 Quebec time) and the euro rose.

The eleven S&P sectors were mostly in the green, starting with Communication Services (+5.11%) and Information Technology (+4.29%).

In the case of electronic exchange after the close of trading, on the other hand Meta (META) which ended with a 6.55% jump to $169.58 fell 1.65% after announcing a decline in earnings and sales for the first time in its history.

Second-quarter profit fell 36% to $6.7 billion, suffering from competition from TikTok and advertiser budget cuts due to poor economic conditions.

But other Nasdaq megacaps have also surged, such as: Google (Alphabet, GOOGL, $113.06, +7.66%) Where Amazon (AMZN, $120.97, +5.37%) and to a lesser extent Apple (AAPL, $156.79, +3.42%) which is due to announce its results on Thursday.

The big names in the semiconductor industry also had wind in their sails, such as AMD (AMD, $89.82, +5.36%) Where Nvidia (NVDA, $177.90, +7.60%). They benefited from the passage in the Senate of a $52 billion bill to restart chip production, text still to be ratified by the House of Representatives.

Heavyweight aircraft manufacturer Dow Jones Boeing ended easily (BA, $156.09, +0.12%) following weaker than expected second quarter results.

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