A deteriorating inflation situation and concern about lost faith in the Federal Reserve's power prompted U.S. central bank officials to rally around an outsized interest rate increase.
July 6, 2022, 1:34 PMNEW YORK - Wall Street put a seesaw day behind it to close higher on Wednesday, as investors digested new clues on the U.S. central bank's approach to rate policy and its inflation fight detailed in the minutes from the latest Federal Reserve meeting.
The 0.75 percentage-point rate increase which came out of the meeting was the first of that size since 1994. According to the minutes, participants judged that an increase of 50 or 75 basis points would likely be appropriate at the policy meeting later this month. "I think people are heavily focused on the terminal rate of what the Federal Reserve's increases are, and the 50-75 debate just points towards where you end up," said Jason Pride, chief investment officer of private wealth at Glenmede.
Eight of the 11 S&P subsectors closed higher, with utilities and technology leading the way. The biggest outlier was the energy index, which slipped 1.7% as crude prices fell to a 12-week low on recession fears. [O/R]
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