Investors seemed ready to put the Fed meeting behind them on Thursday, sparking a fresh rally in stocks a day after the market tumbled following the first rate hike in three years.
Stocks rallied Thursday as investors took a breather after a brief panic following the Fed meeting.
Stocks dropped sharply on Wednesday as Kevin Warsh's tough talk on inflation raised the fear of more hikes.
But investors' nerves were calmed on Thursday as bond yields and oil prices fell.
Markets were rattled by Federal Reserve chair Kevin Warsh's tough talk on inflation, which raised the specter of more tightening after the Fed delivered its first interest rate increase since July 2023.
But moves reversed on Thursday, and investors jumped back into equities as bond yields and oil prices cooled.
Here's where major indexes stood around 10:15 a.m. ET:
S&P 500:
7,622.01, up 0.93%
Dow Jones Industrial Average:
51,691.90, up 0.45% (+230 points)
Nasdaq 100:
29,404.88, up 1.59%
Investors had been jolted by a more hawkish meeting than was expected. Markets see the potential for another rate hike in December, with Warsh characterizing the economy as strong and framed the hike as removing a "dose of accommodation." Though, as has been his style so far as Fed chief, he stopped short of giving further guidance.
"Markets were hoping for clarity on rate hikes from the Fed on Wednesday, but instead we got more uncertainty — and that is the underlying reason why stocks (and bonds) dropped after Fed Chair Warsh's press conference," said Tom Essaye, the founder of Sevens Report Research, in a client note on Thursday.
But the worries seemed to subside on Thursday morning, as investors were encouraged by falling oil prices and ebbing bond yields.
Brent Crude prices was down 3% to around $102 after testing $110 per barrel earlier in the week. US oil was down 2% to $100.
"Now that we are past this rate hike, stocks can move on, as uncertainty has faded," said Bob Edwards, the chief investment officer at Edwards Asset Management, in an email on Thursday.
Edwards said he expects one more hike to come in December, and that the Fed is unlikely to raise interest rates in October, so close to the midterm elections.
This article was written by wedwards@businessinsider.com (William Edwards) from Business Insider and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.