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US stocks were down and seesawed a day after the Federal Reserve raised the federal funds rate by 75 basis points.
Stocks rallied on Wednesday afternoon, extending earlier gains, after the Fed’s decision to tame inflation as Fed Chairman Jerome Powell argued that the country’s economy had not yet slipped into a recession.
The S&P 500 rose 102.56, or 2.6%, to 4023.61. The Dow Jones Industrial Average advanced 436.05, or 1.4%, to 32,197.59. The Nasdaq Composite posted its biggest one-day percentage gain in more than two years, jumping 469.85 points, or 4.1%, to 12,032.42.
Shares rallied earlier on Wednesday after mega-cap tech companies Microsoft and Alphabet, Google’s parent company, reported earnings that beat investors feared.
“The market is in a bearish position,” said Tim Leary, high yield bond portfolio manager for RBC Global Asset Management. “Trading volumes have been thin. You get a whiff of good news, and it doesn’t take much to have the market rally.”
This week is considered a pivotal week in financial markets, and traders around the world were studying the Fed’s interest rate decision. Investors are watching closely for any hints from central bankers about how big further interest rate hikes will be this year – and whether officials expect to turn around and start cutting rates next year.
In a policy statement, Fed officials acknowledged signs of slowing economic activity. Powell said it would likely become appropriate to slow the pace of interest rate hikes.
Meanwhile, stocks were mostly higher in Asia on Thursday.
Hong Kong’s benchmark Hang Seng index slipped 0.1% to 20,642.80 after the territory’s Monetary Authority matched the Fed’s 0.75 percentage point rate hike with one of his. The HKMA aligns its policies with US currency movements to keep the Hong Kong dollar at a stable rate against the US dollar.
Tokyo’s Nikkei 225 rose 0.4% to 27,815.48, while the Shanghai Composite Index added 0.3% to 3,284.32.
In Seoul, the Kospi advanced 0.8% to 2,435.27.
Australia’s S&P/ASX 200 jumped 1% to 6,889.70 after the government announced retail sales rose in June for the sixth consecutive month.
Additionally, Treasurer Jim Chalmers told parliament that the government expects inflation to remain unacceptably low for some time and the economy to slow but not fall into recession.
Markets in Thailand have been closed for a holiday.