Wall Street stocks, oil prices rise after aggressive Fed hike expectations

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, March 17, 2022. REUTERS/Brendan McDermid

NEW YORK (Reuters) – Wall Street stocks rebounded from early session losses on Thursday as investors weighed the economic ramifications of the Federal Reserve’s surprisingly strong stance on interest rates, while oil prices rose on supply shortage concerns stemming from the conflict between Russia and Ukraine.

The Federal Reserve announced a quarter-percentage point increase to nearly zero in interest rates on Wednesday, the first increase in nearly three years as it sought to combat rising rates. The US central bank also expected six more increases of similar size this year, raising concerns among traders about the impact on economic growth.

US Treasury yields held just below three-year highs on Thursday and the closely watched yield curve sloped, having earlier settled at its lowest level in more than two years.

The 10-year and 2-year benchmark returns were at 2.1653% and 1.969%, respectively.

“The big surprise yesterday was the point plot,” said Thomas Hayes, chairman of Great Hill Capital in New York, referring to the Fed’s rate outlook. Read more

“It was a moderate rise but it was hawkish rhetoric and expectations. We believe that if they get anywhere near their expectations, they will reverse the yield curve and cause a guaranteed recession.”

On Wall Street, the three major indexes reversed early losses, led by the healthcare, consumer appreciation, technology and financial sectors.

Dow Jones Industrial Average (.DJI) The S&P 500 rose 1.23% to 34,480.76 (.SPX) It rose 1.23% to 4,411.67 and the Nasdaq Composite Index (nineteenth) He added 1.33% to 13614.78.

“We had a comfortable rally yesterday and the market is absorbing that today, consolidating a bit and trying to get comfortable with reality versus expectations in terms of what the Fed is expecting,” Hayes added.

European shares also rose in choppy trading after the Fed rate hike and a similar move by the Bank of England. Read more

Pan-European STOXX 600 Index (.stoxx) It rose 0.45%, while the MSCI gauge of stocks worldwide (.MIWD00000PUS.) Gained 1.77%.

Oil prices rose more than 8%, continuing a series of violent daily fluctuations, as the market rebounded from several days of losses with renewed focus on supply shortages in the coming weeks due to sanctions on Russia. Read more

Brent crude futures settled up 8.79% at $106.64 a barrel, the highest percentage since mid-2020.

US West Texas Intermediate crude rose 8.35% to $102.98 a barrel.

The dollar index, which measures the dollar’s strength against six currencies, was down 0.47% to 98.026.

Gold rose 1% as the dollar and US Treasury yields declined. Spot gold rose 0.7% to $1,942.04 an ounce, while US gold futures rose 1.62% to $1,939.00 an ounce.

Additional reporting by Shibuike Ojo in New York. Editing by Kirsten Donovan and Aurora Ellis

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