FOMC votes to raise interest rates for second time in three meetings.
US stocks held on to gains Wednesday after the Federal Open Market Committee (FOMC) voted to raise the federal funds rate for the second time in three meetings.
The large-cap S&P 500 Index (NYSEARCA:SPY) rose 0.8% to 2,385.26, with ten of 11 sectors reporting gains.
The Dow Jones Industrial Average (NYSEARCA:DIA) strengthened 0.5% to 20,950.10.
Meanwhile, the technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) advanced 0.7% to end at 5,900.05.
The CBOE VIX (NYSEARCA:VXX), Wall Street’s preferred measure of market uncertainty, declined 5.5% to 11.63. The volatility gauge approached 2017 highs during the previous session as investors braced for Wednesday’s FOMC decision.
Members of the Federal Reserve’s policy committee voted to raise the target for the federal funds rate to 0.75% to 1.00% in a move that was widely predicted. Central bankers had given strong hints in recent weeks that rates will rise sooner than previously expected.
In economic data, annual consumer inflation rose in February to new five-year highs, adding further justification to the central bank’s latest policy decision. The consumer price index (CPI) rose 2.7% in the 12 months through February, data from the Labor Department showed.
So-called core inflation, which excludes volatile goods such as food and energy, rose 2.2% annually.
Separately, data from the Commerce Department showed retail sales edged up 0.1% in February, the smallest gain in six months.
Attention on Thursday shifts to employment and housing data with reports on initial jobless claims and housing starts.
The Final Word: With inflation and job creation accelerating, the Fed is on course to continue normalizing monetary policy this year. Policymakers are keeping close tabs on inflation in the wake of President Donald Trump’s election victory.