Officials at the US Federal Reserve approved a 0.25% rate hike on Wed, the first increase since Dec 2018, and signaled hikes at all six remaining meetings in 2022. US stocks declined immediately after the Fed’s decision was made known, but recovered, and then surged into the green.
The Dow Jones Industrial Average gained 518.76 pts, or 1.55%, to close at 34,063.10. The S&P 500 index rose 2.24%. The tech-heavy Nasdaq Composite advanced 3.77%. The small-cap Russell 2000 gained 3.14%.
The yield on the 10-year Treasury note notched up 4.11 basis points (bps) to 2.1849%.
Bank shares reacted positively to the higher bond yields. Shares of Bank of America (BAC US, +3.13%), JP Morgan (JPM US, +4.47%), and Wells Fargo (WFC US, +2.97%) rose on Wed.
The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, fell 0.48% to 98.618.
Usually, a weaker dollar is good for commodity prices, but that was not the case on Wed. The most actively traded US gold futures (Apr) contracts settled down $20.50, or 1.1%, at US$1,909.20/oz. May silver, which is the most actively traded silver futures, fell 44.8 cents, or 1.8%, to end at US$24.710/oz.
US wheat futures fell by their daily maximum as investors weighed whether talks between Ukraine and Russia could lead to a ceasefire in the three-week-long war, while rain forecast in the US Plains eased concerns about parched crops.
The front-month Brent and WTI crude oil futures futures closed down $1.89 at US$98.02/bbl and $1.40 at US$95.04/bbl respectively.
Shares of Chinese companies listed publicly in the US rocketed higher on Wed. According to Chinese state media, regulators from both countries are progressing toward cooperation to keep Chinese companies listed on US exchanges. Among the soaring stocks were Alibaba (BABA US, +36.76%), JD.com (JD US, + 39.36%) and Pinduoduo (PDD US, +56.06%).
European equity markets finished higher on Wed. The UK FTSE gained 1.62%, France's CAC 40 rose 3.68%, while the German DAX advanced 3.76%.