Dow Jumps 400 Points After Powell Says Fed ‘Won’t Hesitate’ To Keep Raising Rates To Combat Inflation

May 17, 2022, 04:14pm

The stock market moved higher on Tuesday in an attempt to bounce back after six consecutive weeks of heavy losses, as investors digest the latest comments from Federal Reserve Chair Powell, who pledged to keep raising interest rates until inflation starts coming down.

The S&P 500 jumped 2% and the tech-laden Nasdaq gained 2.8%, paring back some of the steep losses from last week.

The market moved higher with ten out of eleven sectors in the S&P 500 posting gains.

Markets initially moved higher after a solid retail sales report and news that China could soon be taking steps to ease restrictions in cities such as Shanghai, with optimism about reopening helping boost prospects for global economic activity.

In an interview with The Wall Street Journal, Fed chair Powell said that the central bank is determined to keep hiking interest rates.

Powell said in the interview that the Fed won't hesitate to keep raising rates until they get inflation under control.

Paramount, Citi, and Ally all saw their shares jump on Tuesday after Warren Buffet disclosed new stakes in his company.

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The American consumer still looks good and that means the economy is still positioned to avoid a recession, according to Edward Moya, senior market analyst at Oanda.

Tangent:

As speculation around a deal continues to swirl, Musk called on the Securities and Exchange Commission to investigate the social media company's user numbers. On Tuesday, shares of both Twitter andTesla rose.

Key Background:

Concerns about rising inflation, rising interest rates, Russia's war with Ukraine, and Covid lockdowns in China have caused stocks to move lower for six weeks in a row. The S&P 500 has fallen 15% so far in 2022, putting the benchmark index near bear market territory. The stock market has fallen into bear market territory this year.

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The number of Wall Street experts who don't agree about rising risks of a recession is growing.

Musk could try to get out of the deal.

Markets are down for the sixth week in a row.