March 22 (UPI) — The Dow Jones gained 254 points Tuesday as markets rebounded following a volatile day of trading brought on by hawkish comments from the head of the Federal Reserve.
The blue-chip Dow rose 0.74% on the day, while the S&P 500 gained 1.13% and the Nasdaq Composite shot up 1.95% after all three major indexes fell slightly on Tuesday after Fed Chair Jerome Powell said inflation is “much too high.”
Powell’s comments came after the Fed last week voted to increase short-term interest rates for the first time since 2018 in an effort to combat rising inflation.
On Monday, Powell said the Fed will “take the necessary steps to ensure a return to price stability,” including additional rate hikes and tightening monetary policy.
Robert Schein, chief investment officer at Blanke Schein Wealth Management, told Yahoo Finance Live that the central bank is “going to tighten until something breaks.”
“That’s either breaking the back of inflation or growth is going to slow,” Schein said.
In response to Powell’s comments, Goldman Sachs increased its forecast to predict 50 basis point hikes at the May and June Fed meetings, while UBS chief economist Jonathan Pingle said in a note Monday that the odds of a 50 basis point rate hike “are rising.”
The benchmark 10-year U.S. treasury yield hit 2.392% on Tuesday at session highs, its highest level since May 2019.
Bank stocks climbed with interest rates as Bank of America stock rose 3.1% and JPMorgan Chase gained 2.13%.
Tech stocks bounced back after losses Tuesday as Google’s parent company, Alphabet, saw shares rise 2.77% while Facebook parent Meta and Amazon also climbed more than 2%.
Shares of Tesla shot up 7.91% after the opening of its Berlin Gigafactory and delivery of its first 30 Model Y cars made in Europe.
All three major averages are on pace to finish the month with gains, with the S&P 500 up 3% for the month of March while the Dow and Nasdaq are each about 2% higher.