US: Stocks end higher as Federal Reserve lifts interest rate, Dow +1.6%

[NEW YORK] Wall Street stocks finished solidly higher on Wednesday after the Federal Reserve lifted interest rates in a heavily-telegraphed move designed to counter inflation.

The Dow Jones Industrial Average finished up 1.6 per cent at 34,063.10.

The broad-based S&P 500 gained 2.2 per cent to 4,357.86, while the tech-rich Nasdaq Composite Index surged 3.8 per cent to 13,436.55.

The Fed's first interest rate hike since 2018 marks an effort to counter spiking consumer prices even as Russia's invasion of Ukraine introduces new uncertainty in an economy battered by supply chain snarls and labour shortages.

Fed Chair Jerome Powell expressed confidence the US economy could withstand the tightening of monetary policy, even as the central bank trimmed its growth forecast for 2022.

Art Hogan, chief strategist at National Securities, said the Fed's message was consistent with market expectations, meaning the interest rate hike had already been priced in.

He said markets also continued to gain strength from a significant pullback in oil prices, which had "got ahead of" themselves by surging shortly after Russia invaded Ukraine.

Analysts have also cited hopes for a peaceful resolution to the conflict as aiding sentiment.

Earlier, US data showed retail sales rose 0.3 per cent last month in a move largely attributed to higher petrol prices.

The prospect of higher interest rates lifted shares of large banks such as JPMorgan Chase and Bank of America, both of which won more than 3 per cent.

Among individual companies, Starbucks jumped 5.2 per cent after longtime chief Howard Schultz announced he would return to lead the company on an interim basis and Kevin Johnson would step down, as the coffee giant faces a unionisation drive at US stores. AFP