- Stocks rose on hopes that the Federal Reserve will successfully combat rising prices without stifling economic growth.
- After initially falling when the Fed announcement was released, the S&P 500 continued to rise. The Nasdaq 100 index increased by nearly 2.5%. Treasury yields have risen, with money markets pricing in three quarter-point raises by the end of 2022, as policymakers have indicated.
- According to the revised projections, policymakers expect three more rate hikes in 2023 and two more in 2024.
- The Fed will also treble the rate at which it reduces its treasury and mortgage-backed securities purchases, to $30 billion per month, putting the programme on track to end in early 2022, rather than mid-year as initially intended.
- A crucial bond market indicator that analyses the difference between inflation-adjusted treasury rates and those on conventional securities implies the Fed will have a difficult time bringing inflation down to its target of 2%. The five-year breakeven rate is currently about 2.7%, down from a record high last month.
- Investors also kept an eye on the omicron coronavirus variant's progress. Top NIH Official Dr. Fauci said at a press conference on Wednesday that trials so far have shown high antibody responses from current boosters, while protection against omicron is weaker with just two doses. According to forecasts from the CDC and Prevention, the strain might account for around 13% of covid-19 cases in New York and New Jersey.
