Indexes rise as Fed suggests pause after rate hikes

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  • US stocks ended higher on Wednesday after a volatile session that saw the release of May Fed meeting minutes.
  • Policy makers want to act “quickly” with rate hikes to rein in runaway inflation.
  • Consumer discretionary stocks led the gain on the S&P 500.

US stocks closed Wednesday’s volatile session higher after


Federal Reserve

the minutes of the meeting said the central bank will stay the course for aggressive interest rate hikes and then take some time to assess the reaction of the economy.

The tech-centric Nasdaq Composite led the rally and joined the S&P 500 in recording a second straight win. Consumer discretionary stocks paced gains on the S&P 500, with high-end retailer Nordstrom boosting its quarterly earnings outlook on the heels of disappointing results from Target and Walmart last week.

Here’s where the U.S. indices stood at 4:00 p.m. Wednesday:

Minutes from the Federal Open Market Committee say policymakers agreed they should “quickly shift the stance of monetary policy to a neutral stance,” in an effort to calm inflation. Rate hikes of 50 basis points “would likely be appropriate at future meetings,” according to the minutes.

Pricing officials said it was important to consider risk management due to the high degree of uncertainty surrounding the economic outlook. “Many participants felt that accelerating the removal of political accommodation would leave the Committee well placed later this year to assess the effects of policy firming and the extent to which economic developments warranted policy adjustments,” indicates the minutes.

“For stock traders, the FOMC minutes were music to their ears because that’s exactly [what they] wanted to hear. No one wants to see the Fed being too hawkish when there is potential fear of a


recession

ongoing,” Naeem Aslam, chief market analyst at AvaTrade, said in a note.

“Overall, we expect further aggressive rate hikes and a gradual reduction in (Fed) bond holdings at this time,” said Bill Merz, head of capital markets research at US Bank Wealth Management. , in a note to Insider. “In particular, given that the Fed is on track to significantly raise short-term rates, it is providing some flexibility later in the year to reassess the need for further hikes, which will also take into account the changing financial conditions.”

The Fed’s preferred inflation gauge, the PCE, is expected to be released on Friday. Headline consumer price inflation was 8.3% in April.

Around the markets, Russia was headed for default as the U.S. Treasury ended a major bond payment waiver.

JPMorgan sees bitcoin rise nearly 30% and says cryptocurrencies are now its preferred alternative asset. Meanwhile, the Terra blockchain will split and effectively take down its native stablecoin following its collapse.

Retail investors are still buying the stock drop despite the portfolio’s average loss of 32%, according to Vanda Research.

Oil prices have risen. West Texas Intermediate crude rose 0.4% to $111.58 a barrel. Brent, the international benchmark, climbed 1.2% to $111.96.

Gold fell 0.8% to $1,851.20 an ounce. The 10-year rate fell 1 basis point to 2.75%.

Bitcoin rose 1.6% to $29,886.11.

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