Dow: +518.76…
Nasdaq: +487.93… S&P: +95.41..
The S&P 500 rose 2.2% on Wednesday, as the market brushed off a hawkish-sounding Fed rate decision once Fed Chair Powell started speaking. The Nasdaq (+3.8%) and Russell 2000 (+3.1%) both gained more than 3.0% while the Dow Jones increased 1.6%.
Eight of the 11 S&P 500 sectors closed higher.
Prior to the Fed, the day started with a risk-on mindset, bolstered by huge gains in Chinese markets after Beijing vowed support for the economy and financial markets and reports indicated that Russia and Ukraine continued to make progress in peace talks (as they continued to get blown to smithereens). The market continued to relish the idea of a ceasefire, even as Ukraine rejected a neutrality plan proposed by Russia.
Regarding the Fed, the central bank raised the target range for the fed funds rate by 25 basis points to 0.25-0.50%, as expected, and signaled six more rate hikes this year with four additional hikes next year.
Powell soothed the market with one of his first statements being that he thinks the probability of a recession within the next year is low.
He also said inflation wasn’t a concern until it was, Then he said it would be ‘just transitory’. Powell couldn’t get wet if he fell out of a boat. They are all “that” bad.
Commodities are still correcting after the big moves. Crude is down about $35 from the highs but it’s still not reflected at the pump. Energy stocks have been pulling back for a few days now.
Gold and silver possibly saw bullish reversal days today. Gold made new all-time highs last week so that’s natural.
Uranium plays like CCJ and URA are churning but put in a better effort today after the pullback. UPRO and TNA both went with the market today. MOS pulled back but still looks great on the chart and Goldman slapped an $85 target on it yesterday.
Fed days are always nerve-wracking but the indexes ended up putting in a decent follow-through day today. We’ll see if they can build on that.
Options expire on Friday.
See you in the morning.