Stock Market Rallies on Bet That Rate Hikes Are Nearly Over

Justin Hopper June 15, 2023Last Updated: June 15, 2023

1 2 minutes read

Updated 15.6.2023 20:02

On Thursday, the Dow Jones Industrial Average rallied by over 300 points and the S&P 500 reached a new 13-month peak, driven by investor optimism that the Federal Reserve’s rate-hiking campaign could be nearing its end.

This comes after the Fed decided to pause its series of rate hikes, which had seen 10 consecutive increases.

Todays Gains

The Dow increased by 356 points or 1.1%, while the S&P 500 and Nasdaq Composite rose by 0.8% and 0.6% respectively. Bond yields decreased, and tech stocks continued to spearhead the market upswing, reflecting the ongoing trend in 2023. The S&P 500’s ascent on Thursday not only marked a new 13-month intraday high for the index, but it also represented its best week since March 31.

The day’s gains propelled the S&P 500 and Nasdaq to their highest intraday levels since April 2022. Some market observers, like Dylan Kremer of Certuity, are now questioning whether value and cyclical stocks can catch up with growth and tech stocks, which could further boost market momentum.

The S&P 500 is currently experiencing its longest winning streak since November 2021 and is on track for its strongest weekly gain since March. From its low point in October, the index has risen by 23% and has increased by 14% since the start of the year. The Nasdaq, which has a strong tech focus, has risen by more than 30% in 2023. Tech stocks such as Microsoft and Oracle saw gains exceeding 2.5%, while Alibaba’s stock rose by 2.7%.

Also Read: Fed Announces Rate Hike Pause, But Says to Expect More Hikes Later This Year

Fed Meeting

Fed Chair Jerome Powell, in a post-meeting press conference, indicated that the Federal Open Market Committee would use the six weeks until its next meeting. This would be used to evaluate the cumulative tightening of monetary policy, with a decision on the policy move in July not yet determined which we touched on in yesterdays article. Despite this uncertainty, investors remain optimistic, as shown by Thursday’s market upswing.

Economic data released on Thursday provided more insight into the strength of the labor market and consumer spending. Weekly jobless claims were slightly above expectations at 262,000 compared to a Dow Jones estimate of 245,000, while retail sales increased by 0.3%.

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