Stock Market Today (5/25/22): Nasdaq Jumps as Fed Minutes Fail to Flame Fears – Kiplinger’s Personal Finance

U.S. equities enjoyed a broad pop Wednesday following the release of minutes from the Federal Reserve’s most recent meeting, which showed that the central bank’s decisionmakers were willing to be both aggressive but flexible in the face of both inflationary and recessionary pressures.

Much of what the Federal Open Market Committee said in the minutes was largely as expected: Members favor 50-basis-point increases to the Fed’s benchmark interest rate in both its June and July meetings, then could pull back to quarter-point raises in subsequent meetings. 

“It’s very clear that bringing down inflation was (and is) the focus at the Fed’s May meeting; Chair Powell has reinforced the need to expeditiously raise rates toward broad estimates of ‘neutral,’ as risks to inflation still tilt to the upside,” says Bob Miller, BlackRock’s head of Americas Fundamental Fixed Income. “We think that after the July meeting, the Fed is likely to become more data-dependent with regard to rate hikes, which essentially means that the policy path after July will depend upon (a) the trajectory of inflation and (b) progress toward correcting the supply/demand imbalances in the labor market.”

While the minutes reinforce what has largely weighed on stocks in 2022 – that the central bank will continue to tighten policy – the Fed’s seeming flexibility helps assuage another growing fear: that of an American recession.

“Elevated risk of a recession is another reason why the Fed could end their rate hike cycle earlier than expected,” says Bill Adams, chief economist for Comerica Bank. “Financial conditions are much tighter than at the start of the year, the economy faces big shocks to disposable income and exports from the Russia-Ukraine war, and housing is starting to turn.”

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Forceful rebounds by the likes of Tesla (TSLA, +4.9%), (AMZN, +2.6%) and Nvidia (NVDA, +5.1%) – the latter of which was due to report earnings after Wednesday’s close – lifted the beat-up Nasdaq Composite 1.5% to 11,434. The S&P 500 gained 1.0% to 3,978, putting more distance between it and the bear-market threshold. And the Dow Jones Industrial Average closed 0.6% higher to 32,120.

Other news in the stock market today:

  • The small-cap Russell 2000 rocketed 2.0% higher to 1,799.
  • U.S. crude oil futures gained 0.5% to settle at $110.33 per barrel.
  • Gold futures fell 1% to end at $1,846.30 an ounce, snapping a four-day win streak.
  • Bitcoin improved by 1% to $29,627.77. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
  • Wendy’s (WEN) …….


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