Technology companies led a broad rally for stocks on Wall Street on Wednesday as investors welcomed another interest rate increase by the Federal Reserve as a sign the central bank is ratcheting up its campaign to fight surging inflation.
The Standard & Poor’s 500 index climbed 2.6%, and the tech-heavy Nasdaq composite surged 4.1%, its biggest gain in more than two years. The Dow Jones industrial average rose 1.4%. Smaller-company stocks also gained, lifting the Russell 2000 2.4%.The Fed’s rapid interest rate increases have strengthened the dollar, which is helping a bit in its effort to slow rising consumer prices.
Some Wall Street analysts were less optimistic that the Fed may opt for more moderate rate increases from here, especially because inflation has accelerated to 9.1%, the fastest annual pace in 41 years. In a note Wednesday, analysts at Citi said that although Powell mentioned that a slowdown in rate increases would be appropriate at some point, exactly when that might be remains undetermined. They said they “would not view this as a particularly dovish comment.”
It’s not uncommon for stocks to rally when the Fed issues a new interest rate policy statement, only to sink the next day.
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