US stocks rally as Fed signals tougher inflation stance, Dow up 1%
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Fed chairman Jerome Powell is seen delivering remarks on a screen as traders work on the floor at the New York Stock Exchange.
PHOTO: REUTERS
NEW YORK (AFP) - Wall Street stocks rocketed higher on Wednesday (Dec 15) after the Federal Reserve signalled a more muscular stance on inflation by accelerating plans to tighten monetary policy.
The benchmark Dow Jones Industrial Average advanced 1.1 per cent to 35,927.43.
The broad-based S&P 500 gained 1.6 per cent to 4,709.85, while the tech-rich Nasdaq Composite Index jumped 2.1 per cent to 15,565.58.
The US central bank announced it will phase out its stimulus measures more quickly by ending them in March, which would then allow it to raise lending rates as soon as May.
After admitting recently that he and his colleagues miscalculated how far prices would rebound in the wake of the pandemic crisis, Fed chairman Jerome Powell has pledged to fight back.
"The fact that the Fed took an aggressive stance is pleasing to the market because they have admitted they were wrong on inflation and that they are going to deal with the inflation problem," said Peter Cardillo of Spartan Capital.
"That's a positive, not a negative."
Art Hogan, chief strategist at National Securities, said investors were heartened the much-anticipated Fed announcement did not include any steps that exceeded the market's expectations in terms of hawkishness, such as immediately ceasing stimulus purchases.
"Everything that happened today was within consensus expectations," Hogan said.
Inflation has risen quickly as a top worry for markets after several reports showing historic spikes in consumer and producer prices.
Earlier on Wednesday, a report on US retail sales showed disappointing growth in November in data that was seen as a sign of the widening drag from inflation.
