Following the announcement of the Federal Reserve’s first interest rate hike since 2018, stocks recovered an afternoon decline and finished broadly higher on Wednesday. The central bank announced a 0.25% point increase in its main short-term rate, as expected by Wall Street. The Fed, which has maintained its interest rate at zero since the global recession hit two years ago, has also projected up to seven rate rises this year.

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The S&P 500 increased by 2.2%, the Dow Jones Industrial Average increased by 1.5%, and the Nasdaq composite increased by 3.8%, its largest rise since November 2020.

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Bond yields rose sharply after the Fed’s announcement. The yield on the 10-year Treasury rose to 2.20%, then hovered at 2.17% by late afternoon. It was at 2.15% late Tuesday. The 2-year Treasury yield rose to 2% then eased back to 1.94%, still a big move from 1.85% a day earlier.

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In remarks after the release of the central bank’s statement, Powell noted that before the Russian invasion of Ukraine he had expected inflation would stabilize within the first three months of this year. He now believes inflation will come down in the second half of the year.

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The S&P 500 rose 95.41 points to 4,357.86. The Dow added 518.76 points to 34,063.10. The Nasdaq gained 487.93 points to 13,436.55. Small-company stocks also notched solid gains. The Russell 2000 index rose 61.75 points, or 3.1%, to 2,030.72.

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A list of concerns including inflation has made for volatile markets over the last few weeks. Stocks have been swaying sharply on a daily, sometimes hourly basis. That volatility will likely remain until investors get a better sense of where the economy is headed.

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Oil prices have mostly surged since late February amid concerns that the conflict in Ukraine will squeeze energy markets. Benchmark U.S. crude fell 1.5%, a relatively subdued move considering the gigantic swings it has made recently. Prices are up nearly 30% for the year, and the recent surge has pushed gas prices in the U.S. to record highs. That has increased concerns that inflation could worsen.

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Technology stocks, banks, retailers and other companies that rely on consumer spending accounted for much of the S&P 500’s gains as investors shifted money into sectors that are considered riskier. Microsoft rose 2.9%, JPMorgan Chase added 4.5% and Amazon.com gained 3.9%. Energy companies and traditionally safe-play stocks, such as utilities, lagged the broader market.