Wall Street ends in green after modest Fed rate hike

The New York Stock Exchange ended in the green on Wednesday after a modest increase in interest rates from the Fed, as expected, and the balanced tone of its chairman Jerome Powell.

Nervous before the monetary decision, the tech-heavy Nasdaq climbed 2.00% to 11,816.32 points and the S&P 500 1.05% to 4,119.21 points while the Dow Jones returned to stability (+0.02% to 34,092.96 points), according to final results.

The Fed raised overnight rates by 25 basis points, which represents a slowdown in the pace of previous monetary tightenings. Rates are now in a range of 4.50 to 4.75%.

The central bank boss indicated that at least two more rate hikes were possible this year, which could involve a pause in the spring, while rejecting the idea, if the economy behaves as expected, that a reduction in rates takes place this year. But at the same time, he insisted that those decisions remained data-driven.

“There was something for everyone, hawks (or supporters of a tough fight against inflation) like doves (more flexible on monetary policy)”, commented Tom Cahill of Ventura Wealth Management. “His tone was very balanced,” he added.

Same story at B. Riley Wealth Management where Art Hogan recalled that Jerome Powell “can be dry and pithy (…) as he was in Jackson Hole” where he had warned that the rise in rates would “do suffer”. But according to Art Hogan, “this press conference was as hawkish as a dove”.

On the bond market, ten-year rates eased significantly to 3.41% instead of 3.50%.

Spartan Capital’s Peter Cardillo noted that the stock market’s transportation sector surged in response to the Fed Chairman’s press conference. “The transport sector is a good indication of how the economy will behave six months later,” said the analyst as airlines concluded sharply higher such as Delta Airlines (+ 2.02%) or American Airlines (+3.41%).

Meta, the parent company of Facebook, climbed almost 18% in electronic trading after the close around 9:40 p.m. after concluding up 2.79% to 153.12 dollars.

The social media giant’s revenue fell 1% in 2022 to $116.61 billion, the first drop in annual revenue since going public in 2012. But it’s more than expected, however. the fourth quarter when a $40 billion share buyback program was announced.

Snap, which oversees the messaging application Snapchat, dropped 10.29% to 10.37 dollars after publishing worrying results the day before for the sector which is financed by advertising revenue on the net.

Snap saw its sales stagnate in the 4th quarter and suffered a loss of $288 million against a profit of 2 million a year earlier. And this despite an increase in users.