U.S. stocks were firmly higher on Wednesday afternoon following a decision by the Federal Reserve to raise its benchmark policy rate by 75 basis points for the fourth consecutive time – to match market expectations – while alluding to a potential slowdown in future monetary tightening.
The S&P 500 (^GSPC) gained 0.6%, while the Dow Jones Industrial Average (^DJI) jumped 280 points, or 0.9%. The tech-heavy Nasdaq Composite (^IXIC) rose 0.3%.
“In determining the pace of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” says the statement from the US central bank. said.
Investors will tune in to Powell’s press conference at 2:30 p.m. ET.
On the economic data front, U.S. private sector payrolls surged in October, according to the ADP’s National Jobs Report, which serves as an imperfect curtain-raiser for the monthly jobs report. of the government which is due to appear on Friday. Wednesday’s data suggests the labor market remains tight despite the Fed’s efforts to rein in growth in its fight against inflation, suggesting aggressive rate hikes could continue.
“The focus will be on what comes next, and we expect Chairman Powell to suggest that the Federal Open Market Committee will likely slow the pace to 50 basis points in December,” Goldman Sachs economists said. led by Jan Hatzius in a recent note.
Any signal from the central bank that the pace of tightening might ease will serve as a tailwind for the major indices, which closed higher last month on expectations of a policy pivot fueled by chatter from some officials suggesting a cut in rate hikes and global concerns that a tightening could trigger financial instability. But some strategists have pushed back against the idea that a change in the Fed’s course is imminent, with inflation and the wage bill still high.
“At this time, the inflation and labor market criteria have not been met, so Mr. Powell cannot announce in advance any intention to move to slower rate increases without contradicting what he said. he said just six weeks ago,” Pantheon Economics chief economist Ian said. Shepherdson said in emailed comments. “The evidence of diminishing pressure in the pipeline is abundant, but it has yet to reach the numbers that the Fed Chairman has clearly stated repeatedly as important, namely the actual inflation data under -lying.”
On the corporate side, shares of Estée Lauder (EL) fell more than 7% after the company cut its full-year guidance. The cosmetics maker cited currency headwinds, lockdowns in China and some U.S. retailers pulling its cosmetics and fragrances from their shelves amid fears of slowing demand.
Shares of Paramount (PARA) fell 12% after the company reported a negative result on content investments and said weak ad revenue also weighed on the quarter.
Shares of Advanced Micro Devices (AMD) gained 3% after the chipmaker reported better-than-expected results, even though fourth-quarter revenue expectations were below Wall Street estimates.
Shares of Match Group (MTCH), owner of Tinder, Hinge and OkCupid, rose 5% after financial data showed revenue above analysts’ estimates and the company pledged to control costs to prepare for reduced economic expectations.
Shares of Mondelez International (MDLZ) rose 2% after the Oreo maker lifted its full-year sales and earnings outlook and indicated that shoppers continued to indulge in snacks and snacks. drinks despite the pinch of inflation.
Meanwhile, shares of Airbnb (ABNB) fell nearly 10% after the company warned of slowing growth in the fourth quarter as consumers shifted to more expensive rentals and favored destinations urban and cross-border.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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