Stocks rose Wednesday as investors awaited the Federal Reserve’s latest interest rate hike decision in its efforts to crush inflation.
The Dow Jones Industrial Average gained 217 points, or 0.64%. The S&P 500 added 0.7%, while the Nasdaq Composite advanced 0.69%.
Shares of Delta rose nearly 2% after the airline said it expects 2023 earnings will roughly double because of “robust” travel demand.
The Fed will conclude its December meeting and is expected to deliver a 50 basis-point rate hike. That’s a smaller bump after four consecutive 75 basis point hikes. A basis point is equal to one-hundredth of one percent.
Chair Jerome Powell will also speak Wednesday, giving further clues about what’s coming from the Fed in 2023. In previous meetings this year, traders have been sensitive to Powell’s language, interpreting his tone as hawkish or dovish.
“This is one of the last major data points that we will see to define the 2022 capital markets,” said U.S. Bank Wealth Management’s Bill Northey. “So, investors will remain very focused on the new projection materials provided by the Federal Reserve, … and importantly, the appropriate monetary policy given that set of circumstances through calendar 2023.”
Stocks are coming off a winning session, fueled by a cooler-than-anticipated inflation report. The November consumer price index was 7.1% on the year, less than the 7.3% gain expected by economists surveyed by Dow Jones. The 0.1% increase from the previous month was also less than forecast.
The signal that inflation may have peaked was positive for stocks as it means the Fed may be one step closer to halting interest rate hikes or switching to cuts, which would fuel equities.
