June 15 (UPI) — U.S. markets rallied on Wednesday as the Federal Reserve executed its largest interest rate hike since 1994.
The Dow Jones Industrial Average gained 303.7 points, or 1%, while the S&P 500 rose 1.46% and the Nasdaq Composite increased 2.5%, snapping losing streaks as investors looked ahead to the conclusion of the Fed’s policy meeting.
Fed Chair Jerome Powell said that he did not expect “unusually large” rate hikes like the 75 basis point increase on Wednesday would become common, while adding that “either a 50 basis point or a 75 basis point increase seems most likely at our next meeting.”
“Over the coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%,” he said.
Treasury yields held lower while the benchmark 10-year yield pulled back from a more than decade-high to just above 3.4%.
The Fed on Wednesday also cut its GDP outlook from 2.8% in March to a 1.7% gain, while inflation projections rose to 5.2% from 4.3%.
“Today’s announcement confirms the Fed’s commitment to fight the inflation battle more aggressively despite the potential aftermath from raising rates at such a rapid pace,” Allianz Investment Management’s Charlie Ripley said, according to CNBC.
Some stocks that had suffered earlier in the week as the S&P 500 dropped for five consecutive sessions, falling into bear market territory, bounced back on Wednesday.
Energy was the only S&P sector to decline Wednesday, falling 2% while all the other major sectors posted gains as communication services led the way with a 3% boost.
Travel stocks also rallied with Norwegian Cruise Line gaining 5.49% and Carnival rising 3.42%, while United Airlines stock climbed 2.43% and Delta increased 1.83%.
Tech shares, which rallied slightly on Tuesday, were also in the green with Netflix rising 7.5%, Tesla gaining 5.48% and Amazon increasing 5.24%.
