Stock & Index yield higher returns from Fed’s 50bps interest rate hike

The US stock market yielded massive returns on Thursday after the Federal Reserve raised the interest rate by 50 basis points, the highest rate ever in the past 22 years.

Ordinarily, the Fed’s hawkish stance yesterday ought to have caused a significant fall in the stock market and other risky investments, but the opposite has been the case.

The news gave the stock markets and other risky assets, including gold and crypto, a strong revival after a prolonged fall.

Some commentators have explained that the market took the opposite direction because Powell’s speech bore a subtle dovish undertone as investors had expected a higher interest rate hike by at least 75 basis points.

Here, Fed Chair Jerome Powell made it clear that the Fed is not “actively considering” a 75 basis point rate hike. The reason for this, as he stated, is because the Fed wants to meet up with the market expectations. Hence, they preferred to go slower than what the investors counted on, which is a 75 basis point increase in the interest rate hike.

Consequently, the dollar index (DXY) had fallen by over 0.90% from its ATH at 105.

Therefore, the stock market was favoured by the Fed’s decision. Dow Jones Industrial (DJI) rose by 2.81%, adding $932 to its market price. Google rose by 4.20%. Amazon is up by 1.37%, Microsoft corporation is up by 2.91%,

Tesla rose by 4.77% adding $43.37 extra, and AAPL gained 4.10% adding an extra $6.54. Netflix gained 2.07% by adding $4.14. The meta media platform Facebook is up by 5.37%

On indices, S&P 500 Index gained 2.99% adding an extra $124.10, US100 Index gained 3.41% adding an extra $445.

The market is currently absorbing gains from the Asian session. However, the general bullish market sentiment towards risky assets seems to have been restored.

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