BUSINESS US stocks rise after Fed delivers small rate hike

BUSINESS

US stocks rise after Fed delivers small rate hike

Xinhua

07:50, February 02, 2023

NEW YORK, Feb. 1 (Xinhua) -- U.S. stocks climbed on Wednesday after the Federal Reserve approved a small interest rate hike.

File photo: AFP

The Dow Jones Industrial Average rose 6.92 points, or 0.02 percent, to 34,092.96. The S&P 500 added 42.61 points, or 1.05 percent, to 4,119.21. The Nasdaq Composite Index increased 231.77 points, or 2.00 percent, to 11,816.32.

Ten of the 11 primary S&P 500 sectors ended in green, with technology and consumer discretionary up 2.29 percent and 1.89 percent, respectively, outpacing the rest. Energy slipped 1.89 percent, the lone declining group.

The Fed on Wednesday announced a quarter-point interest rate hike, boosting the target range for the federal funds rate to 4.5-4.75 percent, as it continued its fight against inflation. The latest hike represented a slowdown from the half-point increase in December.

"Inflation has eased somewhat but remains elevated," the U.S. central bank said in a statement after a two-day meeting, while reiterating that "ongoing increases in the target range will be appropriate."

In his post-meeting press conference, Fed Chair Jerome Powell said the Fed recognizes that the pace of inflation has eased, but "it would be very premature to declare victory."

"Despite early signs of easing U.S. labor costs and prospects of an end to the Fed rate-hike cycle, we believe that U.S. equities will underperform regional peers this year," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note on Wednesday.

"We are least preferred on U.S. equities," he said, adding "we expect emerging markets, including China and German equities, to be among the main early beneficiaries from an inflection point in global growth in 2023."

On the economic front, payroll services firm ADP reported Wednesday that U.S. private sector employers added 106,000 jobs in January, down from a revised 253,000 jobs in the prior month.

The Institute for Supply Management's manufacturing index slipped to 47.4 percent in January, from 48.4 percent in December.

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