May 4, 2022.
The stock market surged higher on Wednesday after the Federal Reserve raised interest rates, as the central bank continues on its path of aggressive monetary policy tightening in a bid to combat surging inflation.
Powell is the Federal Reserve chair.
The S&P 500 rose 2.5% and the tech-laden Nasdaq gained 2.5% after the Federal Reserve announced it was keeping its monetary policy unchanged.
The Federal Reserve hiked interest rates by half a percentage point, the largest increase in over two decades, as it looks to combat historically high levels of inflation.
Roughly $30 billion of Treasurys and $17.5 billion of mortgage-backed securities will be rolled off by the central bank in June.
Current market expectations are for the federal funds rate to reach 3% by the end of 2022, as traders expect the Federal Reserve to continue raising interest rates.
The central bank's announcement was about as dovish as could be expected, but still shows that the Fed is serious about fighting inflation.
The benchmark 10-year Treasury note traded just below its highest level since the beginning of the year.
Markets are reacting to the Federal Reserve's rate hike and balance sheet reduction, with no major sell-off occurring after the announcement.
The black hole of tech pessimism in the markets, with tech stocks continuing to getdemolished, as investors flee this sector. Tech shares took a hit on Wednesday after a number of disappointing first quarter earnings results.
The stock market is still recovering from a brutal sell-off in April. The S&P 500 recorded its worst month since March 2020, falling 8.8%, while the Dow recorded its worst month since March 2020, falling 4.9%.
The Fed allowed the biggest interest rate hike in 22 years to fight inflation.
The markets are higher, but experts don't like it.
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