US Stocks Rise as Investors Digest Fed Rate Hike and Banking Sector Turmoil

US Stocks Rise as Investors Digest Fed Rate Hike and Banking Sector Turmoil

The US stock market rebounded on Thursday, driven by the United States central bank’s latest interest rate hike and commentary following banking sector turmoil. Wall Street stocks ended higher as investors digested the Federal Reserve’s earlier comments, which suggested it is close to completing its hiking cycle.

The Dow Jones Industrial Average closed 0.2% higher at 32,105.25, while the broad-based S&P 500 Index rose 0.3% to 3,948.72. The tech-heavy Nasdaq Composite Index surged 1% to 11,787.40.

Treasury Secretary Janet Yellen told a House subcommittee hearing that the authorities would be “prepared to take additional actions if warranted” to prevent contagion in the financial sector, which helped to calm the markets.

Fed chairman Jerome Powell suggested in a press briefing that the Fed may be able to lift rates less than planned, as banking sector turmoil had weighed on the economy similarly to another rate increase. The Fed “effectively said that they are going to pause or step back after raising interest rates one more time”, economist Hugh Johnson told AFP.

The bounce back was also supported by the strong performance of individual companies such as Microsoft, which picked up around 2%, and Apple, which edged up 0.7%.

However, some regional lenders continued to feel pressure, with KeyCorp slipping 6.5%, the First Republic dropping 6%, and PacWest Bancorp falling 8.6%.

In conclusion, the US stock market has responded positively to the Federal Reserve’s latest interest rate hike and commentary and Treasury Secretary Janet Yellen’s assurance to take additional actions if necessary. While some regional lenders are still struggling, the market’s outlook appears stable.

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