On Wednesday, the Federal Reserve raised interest rates by 0.25%, reiterating its commitment to 5% rates projections this year. Even though Powell admitted that the economy has entered disinflationary phases, the Federal Reserve said it was not done raising interest rates to get the US economy into a "restrictive stance" to fight inflation until it reached the targeted 2% level. Meta Platforms Inc. and Align Technology Inc. both reported strong earnings, which were followed by a rapid increase in share price. In Thursday's session, attention will be focused on jobless claims, productivity, and factory order data, as well as the Eurozone's expected 50 basis point rate hike.
The Dow Jones Industrial Average closed at 34,093, the S&P 500 gained 42.6 points or 1.1% to 4,119.2, and the Nasdaq jumped 2.16% to close at 12363.10. The market priced in the Fed to be dovish, with slowing rate hikes. Apple Inc., Alphabet Inc., and Amazon.com Inc. earnings are expected to move the market higher on Thursday.
Gold has surpassed the $1,950 resistance level for the first time in nearly a year. The slowing rate hikes by the Fed may put pressure on the value of the dollar, potentially increasing demand for gold. The World Gold Council (WGC) reported on Tuesday that central banks added 1,136 metric tonnes of gold worth $70 billion to their stockpiles in 2022, the most of any year since 1967.
Prices fell on Wednesday, with Brent crude futures falling 2.89% and WTI U.S. crude futures falling 2.96%. The increase in crude oil and fuel inventories in the United States to their highest level since June 2021, combined with the Federal Reserve's interest rate hike, has pushed up oil prices. The OPEC+ coalition has held steady on its production policies, even as oil output experienced a decline in January.
The dollar index fell to a nine-month low after the Federal Reserve raised interest rates by 25 basis points. The market expects the Fed to cut rates as soon as this year. With the core PCE price index at 4.4%, that is unlikely to happen anytime soon. The euro and British pound, however, are strengthening ahead of hawkish central bank meetings.