The Fed’s decision fueled confidence – Wall Street rose

Trading in the US started on the rise the day after the central bank Fed’s interest rate decision.

Yesterday, the Fed raised its key interest rate by a quarter of a percentage point, as expected, to a range of 3.75-4.00 percent.

Among the main indexes, the flagship index Dow Jones rose by 0.8 percent shortly after the opening, the broad S&P 500 index by 1.1 percent and the technology-focused Nasdaq by 1.5 percent.

In Wednesday’s trading, all three main indices fell. Now on Thursday, the indices seem to recover their losses from yesterday.

In general, higher policy rates are often thought to weigh stocks down. However, some analysts have expressed views that the Fed’s first hike since 2023 could strengthen investors’ confidence in the central bank, as the Fed’s independence has been tested by the president Donald Trump’s in the second season.

Trump has repeatedly pressured the central bank to lower interest rates. After yesterday’s interest rate decision, Trump said that interest rates were too high and “inappropriate”. According to Trump, the US key interest rate should be at the level of one percent.

by Bokeh Capital Partners investment manager Kim Forrest commented to Reuters that he believes the Fed will keep a light grip on interest rate hikes in the future.

“It doesn’t look like we’ve moved into the rate hike cycle we saw in 2022 and 2023,” Forrest commented.

Uncertainty about how high interest rates could ultimately rise is likely to keep stocks and Treasury yields volatile in the coming weeks.

The interest rate on the US ten-year government bond has fallen sharply on Thursday. At the opening of Wall Street trading, the interest rate was 7.8 percentage points lower at 4.95 percent.

UBS Global Wealth Managementin investment manager Mark Haefele stated in his review published on Thursday that his team is still “positioned for further gains in stocks. However, Haefele says that he is also preparing for the volatility of the US market in the near future.

“If tightening remains moderate, credit margins stable and results continue to grow, the price increase should have the conditions to expand into different sectors and regions.”

“We recommend diversified equity investments and at the same time avoid excessive concentration in areas that are particularly sensitive to interest rates or rely on only one return driver,” commented Haefele.