US close: Stocks extend rally following Fed's rate decision

dl nyse new york stock exchange wall st street city finance dow jones nasdaq sp finance dollar dollars us usa united states of america 2 — New York Stock ExchangeSharecast photo / Josh White

Wall Street stocks closed higher on Thursday as investors digested the Federal Reserve's interest rate decision, jobless claims data and news out of Russia and Ukraine.

At the close, the Dow Jones Industrial Average was up 1.23% at 34,480.76, while the S&P 500 was 1.23% firmer at 4,411.67 and the Nasdaq Composite saw out the session 1.33% stronger at 13,614.78.

The Dow closed 417.66 points higher on Thursday, extending gains recorded in the previous session after the Federal Reserve raised its benchmark lending rate target by 0.25% after its two-day policy meeting for the first rate hike in four years.

The Fed decision was still in focus on Thursday, given that it marked a significant shift away from two years of accommodative policy, due to inflation running at 40-year highs and many economies facing a cost-of-living crisis.

Looking ahead, the central bank said it now sees its main policy rate reaching 1.9% by the end of 2022, before increasing to 2.8% next year, with the bank’s number-crunching suggesting that was the level where interest would begin putting the kibosh on economic growth.

Also in focus during the session were comments from Kremlin spokesman Dmitry Peskov, who said a Financial Times report of "substantial progress" being made in talks between Kyiv and Moscow were "wrong". Although negotiations were set to continue on Thursday, Peskov blamed Ukraine for dragging its feet, claiming that Kyiv was "in no rush" to reach an agreement.

"For all the talk about wanting to find a diplomatic path forward, we haven't seen them act on that," said Pentagon spokesman John Kirby. "What you're seeing by the Russians on the ground is a full-on commitment to military operations."

On Wednesday, Ukrainian president Volodymyr Zelensky told NBC News that talks with Moscow were ongoing but "fairly difficult".

Elsewhere, Russia's finance ministry has reportedly sent an order to Citibank's London branch to make $117.0m in interest payments on two dollar bonds that were due on Wednesday, as it looks to avoid its first default on foreign debt since 1918. It was not made clear as to whether the payment was made in dollars or roubles.

On the macro front, new claims for unemployment benefits fell by 15,000 to 214,000 in the week ended 12 March, according to the Labor Department, for the lowest figure in ten weeks.

That figure was down from the prior week's revised 229,000 reading and ahead of market expectations for a print of 220,000. The four-week moving average, which aims to strip out week-to-week volatility, was 223,000, a decrease of 8,750 week-on-week, while continuing claims printed at 1.41m.

On another note, housing starts in the US surged 6.8% month-on-month to a seasonally adjusted annualised rate of 1.76m in February 2022, the highest since June 2006, and well above market forecasts of 1.69m, while building permits fell 1.9% on the month to a seasonally adjusted annual rate of 1.85bn in February, down from the previous month's 16-year high of 1.89bn and in line with market expectations.

Still on data, the Philadelphia Fed manufacturing index rose to 27.4 in March from 16 in February, above market expectations of 15 for the highest reading since November 2021.

Finally, industrial production increased 7.5% year-on-year in February, the biggest annual gain since June 2021, with manufacturing jumping 7.4% and mining increasing 17.3%, while utilities output contracted 1.2%

In the corporate space, Dollar General shares were in the green before the open despite posting a wider than expected drop in same-store sales but issued an upbeat full-year outlook.

Dow Jones - Risers

Dow Chemical Co. (DOW) $62.84 5.37%
American Express Co. (AXP) $186.97 3.52%
Caterpillar Inc. (CAT) $221.70 2.60%
Salesforce.Com Inc. (CRM) $210.41 2.35%
Amgen Inc. (AMGN) $235.86 1.81%
Nike Inc. (NKE) $127.41 1.77%
Unitedhealth Group Inc. (UNH) $507.02 1.76%
Chevron Corp. (CVX) $160.44 1.73%
Home Depot Inc. (HD) $336.36 1.65%
3M Co. (MMM) $147.69 1.50%