The Dow Jones Industrial Average rose 932.27 points, or 2.81%, to 34,061.06, the S&P 500 gained 124.69 points, or 2.99%, to 4,300.17 and the Nasdaq Composite added 401.10 points, or 3.19%, to 12,964.86. Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off. Two separate sets of data showed private employers hired the fewest workers in two years last month, while expansion in the services sector unexpectedly lost some momentum in April. Lyft Inc shares plummeted 30% amid concerns about the company’s ridership and spending. The ride-hailing company reported first-quarter revenue of $875 million, a 44% increase over the previous year, while the number of active riders missed analyst expectations. Starbucks Corp rose 9.9% after the coffee chain saw quarterly comparable sales grow 12% in North America. Livent Corp gained 30.2% after it posted a better-than-expected quarterly profit and bolstered its 2022 revenue outlook on higher demand for lithium used in electric vehicle batteries.
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The S&P 500 scored its highest one-day percentage rise in nearly two years after the Federal Reserve raised interest rates, as predicted. Following the announcement, stocks initially sawsawed, but eventually the indices strengthened. The S&P 500’s gain of nearly 3% was the largest since May 18, 2020. The Federal Reserve raised its benchmark overnight interest rate by half a percentage point on Wednesday and announced that it will begin decreasing the central bank’s $9 trillion asset portfolio next month in an effort to decrease inflation even further. In a unanimous decision, the Federal Reserve set its target federal funds rate at 0.75 percent to 1%, implying that further increases in borrowing rates of a similar magnitude are probable. “It’s evident that they (the Fed) see the need to keep prices in check,” said Greg Bassuk, CEO of AXS Investments in Port Chester, New York. “Even as the Fed gets more aggressive with rate hikes, we still need to grapple with the geopolitical tensions, the ongoing COVID issues as well as these wide-ranging corporate earnings results. So not withstanding the Fed move, we think we’ll still see some more volatility ahead.” Investors watched Powell’s news conference for fresh clues on how far and how fast the central bank is prepared to go in an effort to bring down decades-high inflation.
All 11 of the major S&P sectors rose, with energy leading the gains. Bank stocks climbed 3.5% after U.S. Treasury two-year yields, the most sensitive to the Federal Reserve’s interest rate outlook, soared to their highest since November 2018. The benchmark 10-year yield topped 3% for a third consecutive day. Volume on U.S. exchanges was 13.46 billion shares, compared with the 11.97 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 3.98-to-1 ratio; on Nasdaq, a 2.39-to-1 ratio favored advancers. The S&P 500 posted two new 52-week highs and 37 new lows; the Nasdaq Composite recorded 28 new highs and 360 new lows.
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