US Stocks Recover After Fed's Hawkish Turn on Inflation
US stocks rose Thursday after the Federal Reserve took a hawkish turn on inflation by raising its main interest rate for the first time in years and hinting at more increases to come. The S&P 500 climbed 1.1%, while the Dow Jones Industrial Average jumped 355 points, or 0.7%. The Nasdaq composite was up 1.7% as of 1:04 p.m. Eastern time.
The Fed's move helped ease pressure on Wall Street after it had slid sharply the previous day following the rate hike and the suggestion of more to come. Falling oil prices also contributed to the recovery, with Brent crude dropping 1.4% to $104.38. This helped pull yields lower in the bond market, which removed some pressure from stocks.
The Fed's decision was seen as a signal that it is committed to getting inflation back under control, which had been a concern after years of staying above its target rate of 2%. Some reports on Thursday suggested the US economy may be strong enough to withstand higher interest rates, with fewer workers applying for unemployment benefits and manufacturing growth in the mid-Atlantic region stronger than expected.
Stocks in the artificial-intelligence industry continued to rebound after their worldwide slide on Monday, with Nvidia climbing 2.4% and Advanced Micro Devices rising 7.1%. Homebuilders also rose despite a report showing fewer new homes were started last month than economists had anticipated.