Following Jerome Powell's hint at no forthcoming rate hikes, the Dow closed higher while tech stocks struggled
The Dow Jones Industrial Average ended the trading day higher, rising 87.37 points, or 0.23 percent, to close at 37,903.29 on Wednesday, as reported by CNBC.
This increase came after Federal Reserve Chair Jerome Powell's comments significantly influenced investor sentiments. Powell noted that it was “unlikely” the Fed's next move would be to hike rates, which reassured the market.
Despite the Dow's gains, the broader market faced declines. The S&P 500 dropped by 0.34 percent to close at 5,018.39, and the Nasdaq Composite decreased by 0.33 percent, ending the day at 15,605.48.
The day experienced considerable volatility, with the Dow at one point surging over 530 points following Powell's reassurance.
The Federal Reserve decided to maintain interest rates, citing continued challenges in reducing inflation to the 2 percent target. During a press conference, Powell stated, “I think it’s unlikely that the next policy rate move will be a hike. I’d say it’s unlikely.”
Investors also reacted to the Fed's announcement that starting in June, it would slow the pace of quantitative tightening.
This process involves decreasing the rate at which the Fed allows the proceeds of maturing bonds to roll off its balance sheet, which is expected to ease upward pressure on bond yields.
The announcement led to a drop in the 10-year Treasury yield to below 4.6 percent, alleviating some fears of it surging back above 5 percent this year, which could hamper economic growth.
However, not all sectors benefited from the day's developments. Stocks tied to artificial intelligence struggled, with significant losses in companies like Advanced Micro Devices, which tumbled 8.9 percent, and Super Micro Computer, which slid 14 percent.
These market movements underscore the mixed investor reactions to the Federal Reserve's cautious stance on interest rates amid persistent inflationary pressures. The broader market indicators reflect ongoing uncertainties and the complex dynamics influencing investor decisions.
