Indexes Jump After Fed’s Biggest Rate Hike In Two Decades

The Dow Jones Industrial Average rallied in late-afternoon trading, as did the Nasdaq and S&P 500, following comments from Fed Chairman Jerome Powell. Indexes initially were volatile after the Federal Reserve raised its benchmark interest rate by half a percentage point, then surged.

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The Fed ended its two-day meeting with a statement at 2 p.m. ET, announcing a widely expected half-point interest rate increase. The rate hike will push the federal funds rate to a range of 0.75%-1%.

Additionally, the Fed confirmed its balance-sheet reduction will happen in phases. Starting June 1, the Fed will roll off $30 billion of Treasuries and $17.5 billion of mortgage-backed securities. After three months, the cap for Treasuries will increase to $60 billion and for mortgages to $35 billion. This was mostly in line with expectations.

“Inflation is much too high, and we understand the hardship it is causing,” Powell said. “We’re moving expeditiously to bring it back down.”

Dow Jones Today

An hour before the close, the Dow Jones industrials were up 2%. The Nasdaq also rose 2%. The S&P 500 advanced 2% while the small-cap Russell 2000 rose 1%. Volume was higher on the Nasdaq and lower on the NYSE vs. the same time on Tuesday. Elsewhere, the yield on the 10-year Treasury note traded at around 2.98% Wednesday afternoon.

As for Dow Jones stocks, all 30 components were flat or higher. Honeywell (HON) and 3M (MMM) led with gains of 3.2% and 2.9%, respectively. Both stocks have reclaimed their 21-day and 50-day lines in recent days after reporting earnings last week. UnitedHealth Group (UNH) lagged the blue chips, trading at break-even in late-afternoon trading.

The Innovator IBD 50 ETF (FFTY), a benchmark for growth stocks, rose 0.5%. Meanwhile, two leading oil and gas stocks in the MarketSmith Growth 250 index scored breakouts.

Shares of Exxon Mobil (XOM) rose 2.9% in decent volume after the company announced earnings last week. Shares broke out above a 89.90 cup-with-handle buy point. The MarketSmith chart shows a blue dot on the relative strength line, which indicates the RS line has hit a new high. This is a bullish sign alongside the breakout.

Oil and gas refining company Phillips 66 (PSX) also broke out, topping a 94.44 buy point. The firm also reported earnings last week, which propelled the stock into its buy range. Shares held a gain of 4.6% in afternoon trading.

The Energy Select Sector SPDR (XLE) rose 3% and led the upside among the S&P sector ETFs. The price of U.S. crude oil climbed more than 5% to $107.72. The European Union proposed a ban on Russian oil imports within six months and on refined oil products by year-end.

Travel Stocks Move On Earnings

A handful of travel-related stocks are expected to report earnings this week, including Booking Holdings (BKNG) after the market closes. According to Zack’s Consensus Estimate, revenue is expected to come in at $2.52 billion, which would show year-over-year growth of 121%. Analysts expect a loss of 16 cents per share, an improvement from Booking’s loss of $5.26 in the year-ago period.

Hotel giant Marriott International (MAR) announced better-than-expected earnings early Wednesday for Q1. Shares shot up 2.9% and briefly moved above a 179.40 buy point of a cup-with-handle base. The stock initially broke out on April 14 but fell back below the buy zone soon after.

Marriott’s earnings jumped to $1.25 a share. Revenue climbed 81% to $4.2 billion. Comparable systemwide constant dollar revenue per available room, or RevPAR, rose 96.5%, or 99.1% in the U.S. and Canada. Wall Street expected Marriott earnings of 90 cents per share, up from 10 cents a year ago. Revenue was seen jumping 80% to $4.17 billion.