By Yasin Ebrahim
Investing.com -- The S&P 500 closed higher Wednesday, led by tech as investors assessed the Fed’s plan to raise rates seven times this year after the central bank delivered its first hike in more than three years.
The Federal Open Market Committee raised its benchmark rate to a range of 0.25% to 0.5% from a 0%-to-0.25% range previously.
The Fed is now forecasting its benchmark rate to rise to 1.9% in 2022, well above the 0.9% forecast in December, pointing to about seven 0.25% rate hikes in total for this year.
“We had expected the dots to reflect 5 hikes in 2022 and 5 more in 2023, but instead they reflect a much steeper and higher trajectory for the funds rate than expected, with the median above neutral for 2023 and 2024,” Jefferies said in a note.
U.S. Treasury yields jumped sharply following the Fed decision. The 2-year U.S. treasury yield, which is sensitive to rate hikes, rose above 1.9%, pricing in the Fed’s seven rate hikes for this year.
The broader market was initially spooked by the steeper than expected path of rate hikes, but found its footing and regained the momentum seen ahead of the Fed decision following positive news concerning the Ukraine-Russia war. The Financial Times reported that Ukraine and Russia have drawn up a neutrality plan to end the war.
Financials, mostly banks, which benefit from rising Treasury yields, were the biggest gainers, up about 2%.
Rising technology stocks also pushed the broader market higher despite expectations for steeper interest rates, the enemy of growth stocks like tech.
Energy was also in focus, weighed down by falling oil prices as investors digested positive Russia-Ukraine developments and surprise build in U.S. weekly crude stockpiles.
U.S. weekly oil inventories rose by 4.345 million barrels for the week ended Mar. 10, confounding expectations for a 1.3 million barrel decline.
In other news, Chinese tech including JD.com (NASDAQ: JD ), Alibaba (NYSE: BABA ) and Pinduoduo (NASDAQ: PDD ) after Beijing said it would roll out support for the broader economy following a surge in Covid-19 cases and suggesting that it crackdown on tech companies would soon be coming to an end.
Kohls (NYSE: KSS ), meanwhile, rallied 17% on reports that Canadian department store chain Hudson’s Bay is mulling a bid for the company. Private equity firm Sycamore Partners is also eyeing a bid for the company in the high $60s per share, the Wall Street Journal reported.
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