Stock market news live updates: Stocks extend gains as investors digest Fed decision
Stocks jumped to session highs on Wednesday following the Federal Reserve’s latest monetary policy decision, in which the central bank affirmed market expectations that it was nearing the start of interest rate hikes as the economic recovery progressed and inflation remained hot.
The S&P 500 rose by more than 2%, adding to gains from earlier in the session. The Nasdaq soared by more than 3% as technology stocks recovered some recent losses. The Dow added some 400 points, or more than 1%.
Investors closely eyed the Fed’s monetary policy statement, which suggested officials were prepared to soon begin raising interest rates from current near-zero levels given the current economic backdrop.
“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Federal Open Market Committee said in its updated statement. The FOMC also said it plans to continue tapering its asset purchases and ultimately end this process in early March, thereby fully ending the quantitative easing program that had helped support financial markets over the course of the pandemic.
Leading up to Wednesday’s statement, investors had been pricing in a more hawkish central bank as the Fed looked to rein in inflation currently running at a four-decade high. Over the past more than month, the Fed had signaled through its December meeting minutes and in public remarks that it was likely to begin raising interest rates from current near-zero levels in March. It also suggested it was considering beginning to roll assets off its balance sheet after amassing some $9 trillion in its bond portfolio.
Though these signals from the Fed began trickling in weeks ago, markets had since been anxiously awaiting more clues about just how aggressive the Fed would ultimately be. The S&P 500 had closed lower for a fifth time in six sessions on Tuesday, extending volatility after Monday’s rollercoaster trading day. The index had dropped more than 8.5% for January-to-date through Tuesday’s close, and the Nasdaq had sunk into a correction, dropping more than 10% from its recent record high.
“If you think about what’s happened in the markets, it indicates the degree of sensitivity market participants have to what is going to be the new rate environment and the new liquidity environment,” David Bailin, Citi chief investment officer and head of Citi global wealth management, told Yahoo Finance Live on Tuesday.
“The Fed made a major reversal about five weeks ago when it said that it was both going to raise rates and also consider quantitative tightening, which effectively means that you and I are going to have to finance the debt that is necessary issued by the Treasury instead of the Fed,” he added. “So with all of that, I think they’re going to look at what happened [in markets] and they’re going to say, our goal here is not to shut the economy and to make things slow. The goal here is to signal their willingness to fight inflation to the extent that they can.”
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1:57 p.m. ET: Stocks hold higher heading into Fed decision
Stocks held onto earlier gains in the minutes leading up to the Federal Reserve’s latest monetary policy decision.
The Nasdaq remained higher by 2.5% just before 2 p.m. ET. The S&P 500 rose by more than 1.5%, with the information technology, consumer discretionary and energy sectors outperforming. The Dow added nearly 1%. Bond yields were little changed, and the benchmark 10-year yield ticked down slightly to 1.78%.
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10:21 a.m. ET: New home sales surge to reach highest level since March 2021 in December
U.S. new home sales jumped far more than expected at the end of last year, underscoring still-elevated demand for housing even as home prices continued to jump and inventory remained constrained.
New home sales rose 11.9% on a month-over-month basis in December, the Commerce Department said Wednesday. This brought sales to a seasonally adjusted annualized rate of 811,000, or the most since March 2021. In November, new home sales had risen by 11.7%, with this figure downwardly revised from the 12.4% rate previously reported.
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9:32 a.m. ET: Stocks open higher, Nasdaq gains 2.5%
Here’s where markets were trading Wednesday morning just after the opening bell:
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S&P 500 (^GSPC): +60 points (+1.38%) to 4,416.45
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Dow (^DJI): +242.46 (+0.71%) to 34,540.19
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Nasdaq (^IXIC): +314.31 (+2.32%) to 13,853.60
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Crude (CL=F): +$0.99 (+1.16%) to $86.59 a barrel
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Gold (GC=F): -$14.90 (-0.80%) to $1,837.60 per ounce
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10-year Treasury (^TNX): -1.4 bps to yield 1.771%
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8:55 a.m. ET: U.S. trade deficit unexpectedly jumps to record level in December
The U.S. goods trade gap yawned to a record high in December, unexpectedly soaring compared to the prior month as imports rose further.
The trade deficit reached $101.0 billion in the final month of 2021, growing from November’s upwardly revised $98.0 billion deficit, according to new data from the Commerce Department on Wednesday. Consensus economists had expected the trade deficit to narrow to $96.0 billion, according to Bloomberg consensus data.
Imports rose by $5.1 billion, or 2.1%, compared to November to reach $258.3 billion. Exports, meanwhile, rose by 1.4%, or $2.2 billion, to come in at $157.3 billion during the month.
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7:23 a.m. ET Wednesday: Stock futures add to earlier losses
Here’s where markets were trading Wednesday morning before the opening bell:
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S&P 500 futures (ES=F): +62.75 points (+1.44%), to 4,411.75
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Dow futures (YM=F): +371 points (+1.09%), to 34,556.00
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Nasdaq futures (NQ=F): +278.75 points (+1.97%) to 14,419.5
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Crude (CL=F): +$0.69 (+0.81%) to $86.29 a barrel
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Gold (GC=F): -$8.40 (-0.45%) to $1,844.10 per ounce
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10-year Treasury (^TNX): +0.5 bps to yield 1.79%
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6:15 p.m. ET Tuesday: Stock futures add to earlier losses
Here’s where futures began trading Tuesday evening:
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S&P 500 futures (ES=F): -31 points (-0.71%), to 4,318.00
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Dow futures (YM=F): -164 points (-0.48%), to 34,021.00
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Nasdaq futures (NQ=F): -156.50 points (-1.11%) to 13,984.25
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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