US close: Stocks maintain gains as Fed adds 75bps to rates

Wall Street stocks snapped their five-day losing streak by the close on Wednesday, as the Federal Reserve made its biggest single interest rate hike in 28 years.

At the close, the Dow Jones Industrial Average was up 1% at 30,668.53, as the S&P 500 added 1.46% to 3,789.99 and the Nasdaq Composite gained 2.5% to 11,099.15.

The Dow closed 303.7 points higher on Wednesday, reversing losses recorded in the previous session after the Bureau of Labor Statistics revealed the PPI for final demand rose 0.8% in May, in line with analysts' expectations, up from 0.4% in April but down 1.6% on March.

“Having essentially telegraphed a 75-basis point rise by an impressive series of leaks, nods and winks, the Fed delivered on these expectations,” said IG chief market analyst Chris Beauchamp.

“But the accompanying statement reveals the deepening conundrum facing Powell and the team - higher inflation, weaker GDP forecasts and the potential for a slower pace of hikes this year and even rate cuts next year.”

Beauchamp said that as a result, investors could be excused for feeling “rather dazed and confused”, although the market was in confusing times.

“Everything still seems to be teetering on a precipice - today’s gains in stocks are holding, if only just, but could vanish in an instant should Powell display his more-hawkish plumage later on.”

Hogging the headlines was the Federal Reserve, which hiked interest rates by more than expected late in the session, and left the door open to another such move in July.

The target range for the Fed funds rate was raised by 75 basis points to between 1.5% and 1.75%, against broad expectations for a 50-basis point increase.

Speculation around a more aggressive move had been rife, however, since fresh data last week painted a dire picture for consumer inflation.

In its policy statement, the Federal Open Market Committee said that inflation remained "elevated" reflecting supply and demand imbalances linked to the pandemic, higher energy quotes and broader price pressures.

It also noted that Russia’s invasion of Ukraine was creating additional upward pressure on prices and dragging on economic growth globally.

During his press conference, Fed chair Jerome Powell did say that he did not expect 75-basis point hikes to become "common".

"I'd like to think that our guidance is going to be credible, but we are always going to act with flexibility", he added.

On the economic front, US mortgage applications increased by 6.60% week-on-week in the seven days ended 10 June, according to the Mortgage Bankers Association.

Elsewhere, US retail sales fell unexpectedly last month on the back of a steep decline in auto sales and a drop in furniture sales.

According to the Department of Commerce, in seasonally adjusted terms, US retail sales volumes slipped at a month-on-month pace of 0.3% to reach $672.87bn.

Economists had anticipated a rise of 0.3%.

On another note, manufacturing activity in the state of New York and part of New Jersey improved by a tad less than expected in June, the results of a closely-followed survey revealed.

The so-called Empire State index increased from a reading of -11.6 for May to -1.2 for June.

Still on data, US business inventories increased 1.20% month-on-month in April, according to the Census Bureau, easing from an upwardly revised 2.4% gain in March and in line with market expectations

Finally, the National Association of Homebuilders' housing market index fell to 67 in June, down from 69 in the previous month to fall short of expectations for a print of 68 and hit its lowest level since June 2020.

In equities, Robinhood Markets slid 2.49% after Atlantic Equities lowered its rating on the retail brokerage to ‘underweight’ from ‘neutral’.

Real estate giant Redfin slipped 1.23% after its chief executive blogged that he was asking 8% of the firm’s workforce to leave amid a cooling housing market.

On the upside, Apple added 2.01% after it struck a 10-year broadcasting deal to bring Major League Soccer to its Apple TV platform, while car rental behemoth Hertz Global jumped 5.1% after it announced a share buyback worth $2bn.

Reporting by Josh White at Sharecast.com. Additional reporting by Iain Gilbert and Alexander Bueso.

Dow Jones - Risers

Boeing Co. (BA) $133.72 9.46%
Microsoft Corp. (MSFT) $251.76 2.97%
Goldman Sachs Group Inc. (GS) $290.07 2.67%
Salesforce.Com Inc. (CRM) $168.55 2.49%
Nike Inc. (NKE) $113.44 2.46%
Cisco Systems Inc. (CSCO) $43.80 2.07%
Apple Inc. (AAPL) $135.43 2.01%
Intel Corp. (INTC) $38.65 1.90%
Walt Disney Co. (DIS) $95.88 1.76%
Visa Inc. (V) $196.16 1.36%

Dow Jones - Fallers

Dow Chemical Co. (DOW) $57.41 -1.96%
Chevron Corp. (CVX) $164.26 -1.96%
Procter & Gamble Co. (PG) $132.51 -0.99%
3M Co. (MMM) $134.33 -0.68%
Travelers Company Inc. (TRV) $165.54 -0.46%
Caterpillar Inc. (CAT) $206.00 -0.33%
Walmart Inc. (WMT) $119.38 -0.07%
Amgen Inc. (AMGN) $235.58 -0.05%
Verizon Communications Inc. (VZ) $49.15 -0.02%
Honeywell International Inc. (HON) $230.94 0.00%

S&P 500 - Risers

Boeing Co. (BA) $133.72 9.46%
Netflix Inc. (NFLX) $180.11 7.50%
Norwegian Cruise Line Holdings Ltd (NCLH) $11.73 5.49%
Coty Inc. Class A (COTY) $7.29 5.35%
Amazon.Com Inc. (AMZN) $107.67 5.24%
Foot Locker Inc. (FL) $29.34 5.20%
Chipotle Mexican Grill Inc. (CMG) $1,266.16 5.16%
Duke Realty Corp. (DRE) $53.68 4.84%
Paypal Holdings Inc (PYPL) $75.83 4.65%
Bread Financial Holdings, Inc. (BFH) $45.58 4.37%

S&P 500 - Fallers

Valero Energy Corp. (VLO) $128.30 -4.07%
Schlumberger Ltd. (SLB) $41.52 -3.93%
Albemarle Corp. (ALB) $215.08 -3.69%
Marathon Petroleum Corporation (MPC) $98.90 -3.67%
CH Robinson Worldwide Inc (CHRW) $103.14 -3.02%
Devon Energy Corp. (DVN) $68.46 -3.02%
FirstEnergy Corp. (FE) $37.24 -3.00%
Occidental Petroleum Corp. (OXY) $60.28 -2.92%
Eog Resources Inc. (EOG) $127.46 -2.90%
Halliburton Co. (HAL) $35.61 -2.89%

Nasdaq 100 - Risers

Mercadolibre Inc. (MELI) $672.69 9.13%
Qurate Retail Inc. (QRTEA) $3.48 8.07%
Netflix Inc. (NFLX) $180.11 7.50%
Tesla Inc (TSLA) $699.00 5.48%
Amazon.Com Inc. (AMZN) $107.67 5.24%
Paypal Holdings Inc (PYPL) $75.83 4.65%
Nvidia Corp. (NVDA) $165.27 4.36%
Take-Two Interactive Software Inc. (TTWO) $126.16 3.91%
Intuit Inc. (INTU) $378.54 3.77%
Biomarin Pharmaceutical Inc. (BMRN) $74.15 3.74%

Nasdaq 100 - Fallers

NetEase Inc. Ads (NTES) $102.80 -2.23%
Trip.com Group Limited (TCOM) $21.92 -1.17%
Dollar Tree Inc (DLTR) $154.54 -0.95%
Charter Communications Inc. (CHTR) $449.00 -0.66%
DENTSPLY Sirona Inc. (XRAY) $35.36 -0.65%
Check Point Software Technologies Ltd. (CHKP) $121.14 -0.26%
Monster Beverage Corp (MNST) $87.87 -0.22%
Amgen Inc. (AMGN) $235.58 -0.05%
Henry Schein Inc. (HSIC) $74.97 -0.04%
Celgene Corp. (CELG) $108.24 0.00%