By Yasin Ebrahim
Investing.com — The Dow jumped Wednesday, led by growth stocks including tech as Treasury yields slipped after the Federal Reserve delivered its biggest rate since 1994.
The Dow Jones Industrial Average gained 1%, or 303 points, the Nasdaq was up 2.5%, and the S&P 500 rose1.5%.
The Fed raised its benchmark rate by a larger than expected 0.75%, with Fed Chairman Jerome Powell admitting that the recent upside inflation had forced the central bank’s hand into tightening monetary policy by more than expected.
In the press conference that followed, Powell said there was a need to “front load” rate hikes, signaling the aggressive hikes now may not be followed up in the future with similarly aggressive hikes.
Treasury yields, which had gained momentum in the days leading up to the decision, fell sharply, paving the way for the growth stocks to rack up gains.
Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) were sharply higher.
Semiconductor stocks were also in ascendency, led by Advanced Micro Devices (NASDAQ:AMD) and NVIDIA (NASDAQ:NVDA).
The recent decline in megacap valuations together with expectations that Fed hawkishness is nearing a peak, has attracted some on Wall Street to return to growth sectors of the market.
“As we’re getting closer and closer to seeing peak hawkishness, potentially by the end of the summer, and given where valuations have gone for this [growth] area of the market, the market is ultimately compelling,” Timothy Chubb, Chief Investment Officer at Girard Partners, told Investing.com in an interview on Thursday. “We have been positioned that way now for the last month.”
Beaten up consumer stocks clawed back some of their recent losses, supported by travel and leisure stocks.
Caesars Entertainment Corporation (NASDAQ:CZR), Norwegian Cruise Line (NYSE:NCLH) and Penn National Gaming (NASDAQ:PENN) were up more 4%.
Energy was the sole sector in the red as data showing U.S. weekly crude inventories unexpectedly increased as domestic production jumped to its highest level since April 2002.
APA (NASDAQ:APA), Exxon Mobil Corp (NYSE:XOM), ONEOK Inc (NYSE:OKE) were among the biggest decliners, down by about 1%.