US stocks soar as Fed’s Powell quells fear of bigger hikes

The S&P 500 rose 3%, Nasdaq 100 jumped 3.4% while the Dow Jones Industrial Average gained 2.8%.

Stocks rallied the most since May 2020 and Treasury yields fell after Federal Reserve Chair Jerome Powell eased concern the central bank will embark on a more aggressive pace of tightening after delivering its steepest rate increase in two decades.

Traders pared their bets on a bigger June hike after Powell said there was “a broad sense on the committee that additional 50 basis-point increases should be on the table for the next couple of meetings.” He also dashed speculation that the Fed was weighing an even larger hike of 75 basis points in the months ahead, saying that it is “not something that the committee is actively considering.” The dollar had its largest decline in two months.

The Federal Open Market Committee voted unanimously to increase the benchmark rate by a half percentage point. It will begin allowing its holdings of Treasuries and mortgage-backed securities to decline in June at an initial combined monthly pace of $47.5 billion, stepping up over three months to $95 billion.

Before the Fed decision, JPMorgan Chase & Co.’s chief Jamie Dimon said the U.S. central bank should have raised rates sooner as price pressures hit the global economy. Treasury Secretary Janet Yellen sees a possible “soft landing” as the Fed moves to bring down inflation. “I do believe we’re going to see solid growth in the coming year,” she said in an interview at a Wall Street Journal event on Wednesday.

Corporate highlights:

• Lyft Inc. and Uber Technologies Inc. reported quarterly results that pointed to strong demand for rides, but failed to reassure Wall Street that a driver shortage that’s cost the companies hundreds of millions of dollars in bonuses was abating.
• Moderna Inc. reported revenue that beat expectations, but said its Covid vaccine purchase orders for 2022 were unchanged from what it reported three months ago.
• Marriott International Inc.’s earnings topped expectations as avid vacationers bid up room rates, advancing the lodging recovery.

Key events this week: 

• Bank of England rate decision and briefing, Thursday
• OPEC+ convenes virtually for a regular meeting, Thursday
• U.S. April jobs report, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 3% as of 4 p.m. New York time
• The Nasdaq 100 rose 3.4%
• The Dow Jones Industrial Average rose 2.8%
• The MSCI World index rose 1.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.9%
• The euro rose 0.8% to $1.0608
• The British pound rose 0.9% to $1.2616
• The Japanese yen rose 0.7% to 129.17 per dollar

Bonds

• The yield on 10-year Treasuries declined five basis points to 2.92%
• Germany’s 10-year yield was little changed at 0.97%
• Britain’s 10-year yield was little changed at 1.97%

Commodities

• West Texas Intermediate crude rose 5.4% to $107.95 a barrel
• Gold futures rose 0.7% to $1,884.30 an ounce

–With assistance from Andreea Papuc, Abigail Moses, Vildana Hajric, Isabelle Lee and Peyton Forte.