US close: Dow adds over 900 points as Fed hikes rates

Wall Street stocks closed sharply higher on Wednesday, after the Federal Reserve confirmed the first 50-basis point rate hike in more than two decades.

At the close the Dow Jones Industrial Average was up 2.81% at 34,061.06, as the S&P 500 added 2.99% to 4,300.17 and the Nasdaq Composite was 3.19% firmer at 12,964.86.

The Dow closed 932.27 points higher, extending gains recorded in the previous session.

“No surprises in the Fed’s decision, but this doesn’t mean that no bazooka was fired by them,” quipped AvaTrade chief market analyst Naeem Aslam.

“The Fed has increased the interest rate by 50 basis points but the fact that this was already anticipated by the markets has calmed some nerves.

“The dollar index has lost steam on the back of the Fed’s decision and this has helped the gold price which has been oversold as some were thinking that the Fed may increase the interest rate by 75 basis points.

“We also see a relief rally for the US equity markets while traders are still fully digesting the message from the Fed.”

Indeed, the Federal Reserve followed through on its recently accelerated timeline for tightening policy late in the session, but indicated that even faster rate hikes were unlikely.

As had been expected, the Federal Open Market Committee raised its target range for the Fed funds rate by 50 basis points to between 0.75% and 1.0%.

Policymakers also said that from 1 June, the central bank would begin running off debt instruments from its $8.9trn balance sheet, at a monthly cadence of $47.5bn.

“Inflation is much too high and we understand the hardship it is causing,” said Fed chair Jerome Powell at his post-meeting press conference.

“We are moving expeditiously to bring it back down.”

Powell added that 75 basis point hikes were not being considered, although there was "a broad sense on the committee that additional 50-basis point increases should be on the table for the next couple of meetings.”

Wednesday's rate hike was the largest single move since May 2000, when the Federal Reserve took its funds rate target to 6.5%.

“All central banks face a dilemma right now over how much relative weight to give to inflation or growth concerns, but it seems clear that the Fed is much more focused on the inflation risks,” said analysts at Lloyds Bank after the Fed's announcement.

On the economic front, US mortgage applications increased by 2.50% week-on-week in the seven days ended 29 April, according to the Mortgage Bankers Association of America.

Elsewhere, private businesses hired 247,000 workers in April according to ADP - the smallest figure since April 2020 and well below forecasts of 395,000.

“In April, the labour market recovery showed signs of slowing as the economy approaches full employment,” said ADP chief economist Nela Richardson.

“While hiring demand remains strong, labour supply shortages caused job gains to soften for both goods producers and services providers.

“As the labor market tightens, small companies, with fewer than 50 employees, struggle with competition for wages amid increased costs.”

Still on data, the US trade deficit widened sharply to a record high of $109.8bn in March, according to the Bureau of Economic Analysis, as a broad-based rise in prices brought about a 10.3% surge in imports, which also topped a fresh high of $351.5bn.

The S&P Global composite PMI for April, meanwhile, was revised higher to a print of 55.6, up from a preliminary reading of 54.7, pointing to a sharp increase in services activity.

Finally, last month's non-manufacturing PMI from the Institute for Supply Management fell to 57.1 in April, down 58.3 in March and well below estimates for a reading of 58.5, primarily due to a restricted labour pool and a slowdown in new orders growth.

In equities, retail pharmacy giant CVS Health jumped 4.78% after it raised full-year forecasts following expectations-busting first quarter earnings.

Airbnb added 7.71% after it beat expectations in its latest set of numbers, and also topped 100 million nights booked in a single quarter for the first time in its history.

On the downside, Uber Technologies skidded 4.65% after the minicab and takeaway delivery specialist posted a wider-than-expected quarterly loss.

Domestic ride-hailing competitor Lyft tumbled 29.91%, meanwhile, after its guidance on profit and sales disappointed the market, even after its first quarter came in better than anticipated.

Dow Jones - Risers

Caterpillar Inc. (CAT) $222.59 4.20%
3M Co. (MMM) $154.23 4.15%
Apple Inc. (AAPL) $166.02 4.10%
Salesforce.Com Inc. (CRM) $185.48 3.99%
International Business Machines Corporation (CDI) (IBM) $137.40 3.68%
Dow Chemical Co. (DOW) $70.61 3.61%
Walgreens Boots Alliance, Inc. (WBA) $44.46 3.54%
McDonald's Corp. (MCD) $254.32 3.44%
Home Depot Inc. (HD) $315.31 3.39%
Cisco Systems Inc. (CSCO) $51.58 3.33%

Dow Jones - Fallers

Dowdupont Inc. (DWDP) $30.52 0.00%
Honeywell International Inc. (HON) $230.94 0.00%
Procter & Gamble Co. (PG) $157.36 0.74%
Johnson & Johnson (JNJ) $180.20 1.07%
Walmart Inc. (WMT) $154.62 1.38%
Unitedhealth Group Inc. (UNH) $507.62 1.60%
Merck & Co. Inc. (MRK) $88.52 1.63%
Amgen Inc. (AMGN) $236.10 1.68%
Travelers Company Inc. (TRV) $175.45 2.15%
Boeing Co. (BA) $156.97 2.21%

S&P 500 - Risers

Starbucks Corp. (SBUX) $81.64 9.83%
Albemarle Corp. (ALB) $215.47 9.31%
Advanced Micro Devices Inc. (AMD) $99.42 9.10%
Macerich Co (MAC) $14.01 8.69%
Expeditors International Of Washington Inc. (EXPD) $110.81 7.95%
American International Group Inc. (AIG) $63.94 7.41%
FMC Technologies Inc. (FTI) $7.86 7.08%
Extra Space Storage (EXR) $195.57 6.82%
Regency Centers Corp. (REG) $72.96 6.36%
Apache Corp. (APA) $45.20 6.30%

S&P 500 - Fallers

Akamai Technologies Inc. (AKAM) $102.76 -9.70%
Johnson Controls International plc (JCI) $56.52 -8.71%
Idexx Laboratories Inc. (IDXX) $411.31 -5.65%
Skyworks Solutions Inc. (SWKS) $113.53 -4.97%
Intercontinental Exchange Inc (ICE) $109.86 -4.04%
Verisk Analytics Inc. (VRSK) $193.53 -3.29%
Healthpeak Properties, Inc (PEAK) $32.28 -2.30%
Jack Henry & Associates Inc. (JKHY) $187.96 -2.27%
Vornado Realty Trust (VNO) $38.12 -1.52%
Coty Inc. Class A (COTY) $7.77 -1.40%

Nasdaq 100 - Risers

Starbucks Corp. (SBUX) $81.64 9.83%
Autodesk Inc. (ADSK) $203.75 5.45%
Meta Platforms Inc. (FB) $223.41 5.37%
Charter Communications Inc. (CHTR) $448.34 5.34%
Henry Schein Inc. (HSIC) $86.42 5.29%
T-Mobile Us, Inc. (TMUS) $132.37 4.85%
Tesla Inc (TSLA) $952.62 4.77%
Marriott International - Class A (MAR) $181.24 4.74%
Dish Network Corp. (DISH) $29.39 4.63%
KLA-Tencor Corp. (KLAC) $349.38 4.60%

Nasdaq 100 - Fallers

Idexx Laboratories Inc. (IDXX) $411.31 -5.65%
Skyworks Solutions Inc. (SWKS) $113.53 -4.97%
Verisk Analytics Inc. (VRSK) $193.53 -3.29%
Check Point Software Technologies Ltd. (CHKP) $126.92 -0.64%
Expedia Group Inc. (EXPE) $149.56 -0.50%
Booking Holdings Inc. (BKNG) $2,103.33 -0.12%
Qurate Retail Inc. (QRTEA) $4.53 0.00%
Maxim Integrated Products Inc. (MXIM) $103.14 0.00%
Alexion Pharmaceuticals Inc. (ALXN) $182.50 0.00%
Mylan Inc. (MYL) $0.00 0.00%