All three indexes were straddling pretty close to break-even all day long until about 2:30 p.m. when suddenly everything went crazy and the market zoomed way up in the final hour.  After having its worst days in two years in recent sessions, today it was the best day in two years with all the indexes up triple digits, the Dow over 932 points. It was likely around 2:30 that the Fed made the announcement making the ½ point rate hike official and validating there would likely be more coming before year end.  And I guess investors decided they really wanted that hike to tame inflation as that last hour saw the biggest spree in a long time, volume considerably above average at just under 13.5 billion.  This was despite less hiring and a loss of momentum in the services sector. As always, the hike benefited bank stocks which jumped 3.5% and 2 year Treasuries soared to their highest yields in 3-1/2 years. 

Wed  May 4, 2022  4:34 PM

Wall Street closes with sharp gains after Fed's interest rate hike

By Echo Wang and Devik Jain

DJ: 33,128.79  +67.29        NAS: 12,563.76  +27.74         S&P: 4,175.48  +20.10     5/3

DJ: 34,061.06  +932.27      NAS: 12,964.86  +401.10       S&P: 4,300.17  +124.69   5/4

May 4 (Reuters) - U.S. stocks ended sharply higher on Wednesday after the Federal Reserve delivered a widely expected interest-rate hike, and the S&P 500 recorded its biggest one-day percentage gain in nearly a year.  Stocks initially see-sawed after the announcement, then the indexes strengthened. The S&P 500's advance of almost 3% was the strongest since May 18, 2020.  The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point and said it would begin shrinking the central bank's $9 trillion asset portfolio next month in an effort to further lower inflation.  The U.S. central bank set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision, with further rises in borrowing costs of perhaps similar magnitude likely to follow.

“It’s clear that they (the Fed) understand the need to contain the soaring prices,” said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York.  “Even as the Fed gets more aggressive with rate hikes, we still need to grapple with the geopolitical tensions, the ongoing COVID issues as well as these wide-ranging corporate earnings results. So not withstanding the Fed move, we think we'll still see some more volatility ahead.”  Investors watched Powell's news conference for fresh clues on how far and how fast the central bank is prepared to go in an effort to bring down decades-high inflation.

The Dow Jones Industrial Average (.DJI) rose 932.27 points, or 2.81%, to 34,061.06, the S&P 500 (.SPX) gained 124.69 points, or 2.99%, to 4,300.17 and the Nasdaq Composite (.IXIC) added 401.10 points, or 3.19%, to 12,964.86.  Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off.    Two separate sets of data showed private employers hired the fewest workers in two years last month, while expansion in the services sector unexpectedly lost some momentum in April. read more 

 

Lyft Inc (LYFT.O) shares plummeted 30% amid concerns about the company's ridership and spending. The ride-hailing company reported first-quarter revenue of $875 million, a 44% increase over the previous year, while the number of active riders missed analyst expectations.  Starbucks Corp  (SBUX.O)  rose 9.9% after the coffee chain saw quarterly comparable sales grow 12% in North America. read more

Livent Corp (LTHM.N) gained 30.2% after it posted a better-than-expected quarterly profit and bolstered its 2022 revenue outlook on higher demand for lithium used in electric vehicle batteries. read more

All 11 of the major S&P sectors rose, with energy (.SPNY) leading the gains.

Bank stocks climbed 3.5% after U.S. Treasury two-year yields, the most sensitive to the Federal Reserve's interest rate outlook, soared to their highest since November 2018. The benchmark 10-year yield topped 3% for a third consecutive day.

Volume on U.S. exchanges was 13.46 billion shares, compared with the 11.97 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 3.98-to-1 ratio; on Nasdaq, a 2.39-to-1 ratio favored advancers. The S&P 500 posted two new 52-week highs and 37 new lows; the Nasdaq Composite recorded 28 new highs and 360 new lows.