Good Evening. The stock market in the United States rose on Wednesday afternoon as investors digested the Federal Reserve’s latest monetary policy decision. The central bank raised interest rates 75 basis points, the highest since 1994, and hinted that another boost could come next month.
By market close, the S&P 500 had gained 1.46%, ending a five-day losing trend. The Nasdaq jumped 2.50%, while the Dow gained 1.00%.
737 MAX
Boeing’s (BA) stock gained over 9.50% today after reports that potential clients in China have been testing Boeing’s 737 MAX jets, which are attempting to reclaim market share in the country. Separately, The Seattle Times claimed that Boeing may be able to resume 787 Dreamliner deliveries in the next weeks, citing a Federal Aviation Administration official.
Boeing appears to have addressed the flaws since then, and the 737 MAX series is once again gaining traction. The 737 MAX has subsequently been certified by Chinese regulators, although the planes have yet to fly in China. The news from China is significant because the country has accounted for around 20% of Boeing’s commercial deliveries since 2017. In the future, the country is likely to be one of the fastest-growing players in the aviation industry.
At closing, BA finished well above the green by 9.46% at $133.72 per share
75 POINT SPIKE
Following a 50-basis-point rate hike in May, the Federal Reserve decided to raise interest rates by 75 basis points in June. During a news conference on Wednesday afternoon, Fed Chair Jerome Powell also stated that a rate hike of 50 to 75 basis points “looks most plausible” for the Fed’s next meeting in July, implying that a full percentage point boost was unlikely in the near future.
The Federal Reserve also raised its inflation projection for this year. Core personal consumption expenditures (PCE), the Fed’s preferred gauge of underlying inflation, are expected to rise by 4.30% in 2022, according to the median Federal Open Market Committee member. The previous time the Fed released an updated set of predictions, in March, the estimate was 4.10%. Core PCE is expected to rise by 2.70% in 2023, before decreasing to 2.30% in 2024, according to the Fed.
At the same time, the Fed’s forecasts for U.S. GDP and unemployment have deteriorated since March. The median FOMC member now expects real GDP to rise 1.7% this year and 2.2% in 2023, down from 2.8%and 2.2%, respectively, in previous years. The unemployment rate is expected to rise to 3.70% by the end of the year, rather than falling to the pre-pandemic multi-decade low of 3.50%, as the Fed anticipated in March.