US: Stocks bounce as markets weigh Federal Reserve rate decision

WALL Street stocks ended higher on Thursday as markets weighed the implications of the US central bank’s latest interest rate hike and commentary, following turmoil in the banking sector.

The movements also came after Treasury Secretary Janet Yellen told a House subcommittee hearing that authorities would be “prepared to take additional actions if warranted” to prevent contagion in the financial sector.

The Dow Jones Industrial Average ended 0.2 per cent higher at 32,105.25, while the broad-based S&P 500 Index rose 0.3 per cent to 3,948.72.

The tech-heavy Nasdaq Composite Index surged 1.0 per cent to 11,787.40.

The bounceback came as traders digested the Federal Reserve’s earlier comments, after major indices plunged Wednesday on the central bank’s ninth consecutive rate increase.

While it raised the benchmark lending rate by a quarter-point to fight inflation, the Fed had also signaled it was close to ending its hiking cycle.

Fed Chair Jerome Powell suggested in a press briefing that the Fed may be able to lift rates less than otherwise planned, as banking sector turmoil had weighed on the economy in a similar way to another rate increase.

The Fed “effectively said that they are going to pause or step back after raising interest rates one more time,” economist Hugh Johnson told AFP.

“That’s a positive signal and it’s the reason why the market has performed reasonably well today,” he added.

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Among individual companies, Microsoft picked up around two per cent while Apple edged up 0.7 per cent.

But regional lenders continued to feel pressure, with KeyCorp slipping 6.5 per cent, First Republic dropping 6.0 per cent and PacWest Bancorp falling 8.6 per cent. AFP