The stock market moved higher on Wednesday after the Federal Reserve raised interest rates by 75 basis points—the largest increase in 28 years, while Fed Chair Jerome Powell also signaled that the central bank could raise rates again by the same magnitude at an upcoming meeting next month.
Stocks rebounded on Wednesday after five losing sessions in a row: The Dow Jones Industrial Average rose 1%, over 300 points, while the S&P 500 gained 1.5% and the tech-heavy Nasdaq Composite 2.5%.
The market rallied after the Federal Reserve announced it would raise interest rates by 75 basis points, the biggest increase since 1994, as it looks to combat red-hot inflation.
Investors had been betting on a 75-basis-point increase, rather than the previously expected 50-basis-point hike, after a much-hotter-than-expected inflation report last week showed consumer prices jumping 8.6% in May compared to a year ago.
Stocks especially got a boost after Fed Chair Jerome Powell said that the central bank will continue to hike rates aggressively, with a similar 75-basis-point increase under consideration for the next meeting in July.
The last time the Federal Reserve raised interest rates by 75 basis points was under the leadership of Alan Greenspan in November 1994, when the central bank orchestrated a soft landing and avoided a recession despite hiking rates seven times in 13 months.
Rates on government bonds moderated somewhat on Wednesday after surging higher earlier in the week, with the 2-year and 10-year Treasury yields recently hitting their highest levels since 2007 and 2011, respectively.