By Yasin Ebrahim
Investing.com – The S&P 500 rebounded to near session highs after giving up some intraday gains Wednesday, as investors assessed the Fed’s plan to raise rates by seven times this year after the central bank delivered its first hike in more than three years.
The S&P 500 rose 1%, the Dow Jones Industrial Average gained 0.5%, or 179 points, the Nasdaq rose 2%.
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.
The broader market was initially spooked by the steeper than expected path of rate hikes, but found its footing and regained momentum seen ahead of the Fed decision.
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.
Financials, mostly banks, which benefit from rising Treasury yields, were the biggest gainers, up nearly 2%.
Signature Bank (NASDAQ:SBNY), Morgan Stanley (NYSE:MS), Charles Schwab (NYSE:SCHW) each rose more than 5%.
Rising technology stocks also pushed the broader market despite the expectations for steeper interest rates, the enemy of growth stocks like tech.
Meta Platforms (NASDAQ:FB) rose more than 3% to lead big tech higher, with Amazon (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL) up more than 1% each.