Stocks soar higher on Wednesday after the Federal Reserve raised interest rates for the first time since 2018 and said it is expects to have six more hikes this year. The Dow Jones Industrial Average jumped over 500 points, while the S&P 500 Index and Nasdaq Composite added 2.2% and 3.7%.
Here's how the market settled on Wednesday:
S&P 500 Index (NYSE: SPY): +2.24% or +95.50 points to 4,357.95
Dow Jones Industrial Average (NYSE: DIA): +1.55% or +518.76 points to 34,063.10
Nasdaq Composite Index (NASDAQ: QQQ): +3.77% or +487.93 points to 13,436.55
Fed approves first rate hike since 2018:
The Federal Reserve on Wednesday approved its first interest rate increase in more than three years as the central bank looks to combat surging inflationary pressures on the U.S. economy. At the conclusion of its two-day policy meeting, the Federal Open Market Committee said it will raise rates by a quarter percentage point, or 25 basis points. This will bring the rate now into a range of 0.25% to 0.5%.
Along with the rate hike, the committee has also planned rate increase for each of the six remaining meeting this year, expecting to bring rates to 1.9% by the end of the year.
Moreover, Fed Chair Jerome Powell hinted during his post-meeting news conference on Wednesday that the central bank may being balance sheet reduction in May, and said the process could be the equivalent of another rate hike this year.
"We are attentive to the risks of further upward pressure on inflation and inflation expectations," Powell said. "The committee is determined to take the measures necessary to restore price stability. The U.S. economy is very strong and well-positioned to handle tighter monetary policy."
Retail sales rose slightly in February, decelerating from January's jump:
U.S. retail sales rose at a more-than-expected rate in February following an upwardly revised gain in January, as inflation weighed heavily on consumer sentiment and spending.
Retail sales rose 0.3% in February over January, according to the Commerce Department's report published Wednesday, coming in slightly below the 0.4% rise expected by consensus economists. However, retail sales for January were upwardly revised to an increase of 4.9%, versus the 3.8% increase previously reported.
The majority of February's gains came from spending at gas stations, rising 5.3% during the month and by 36.4% year-over-year. Excluding automobile and gas prices, retail sales fell 0.4% month-on-month in February. Retail sales excluding autos and gas had risen 5.2% in January compared to December.
Here's how benchmarks started trading after open:
S&P 500 Index: +1.06% or +45.38 points to 4,307.83
Dow Jones Industrial Average: +1.09% or +365.46 points to 33,909.80
Nasdaq Composite Index: +1.41% or +183.07 points to 13,132.18