U.S. stock markets surged on Thursday after the Federal Reserve raised interest rates to control high inflation. The S&P 500 index rose by 1.2%, the Nasdaq Composite increased by 1.7%, and the Dow Jones Industrial Average gained 365 points or 0.7%. Additionally, the Russell 2000 index, which tracks small and mid-sized companies, rose by 1%.
Stock Growth and Bond Decline
The rise in stocks was driven by significant jumps in technology stocks, including Nvidia, Amazon, Microsoft, Intel, and AMD. This increase was also accompanied by a rise in bonds, which led to a decrease in their yields. Oil prices also fell for the second consecutive day, and for the first time since last Friday, U.S. crude oil prices dropped below $100 per barrel. Brent crude prices also fell to $101, down from $109 two days prior.
Read more: Interest Rate Increase Affects American Consumers
Positive Economic News and Future Predictions
Meanwhile, a new report on jobless claims showed that the number of claims has reached its lowest level since July. However, this data may be unusual due to the short holiday week. The yield on U.S. Treasury bonds also decreased following the stock market rise. After reaching 5.02% on Wednesday, the 10-year Treasury yield fell to 4.94%. Additionally, the 30-year yield decreased to 5.29%.
The global decline in bond yields also continued, as the Bank of England decided not to raise interest rates and canceled its long-term bond sales program. This trend has improved confidence in the Federal Reserve and its new chair, Kevin Warsh. Following several initial speeches by Warsh that caused a sharp increase in bond yields, his press conference on Wednesday was praised for its clarity.
However, the drop in oil prices was part of an evening report indicating that President Donald Trump is likely to discuss the Iran war with Gulf leaders at a high-level meeting at the United Nations General Assembly next week. Additionally, Saudi Arabia has reportedly begun improving its east-west oil pipeline capacity. Oil prices have significantly increased since the beginning of the year, and gasoline and diesel prices are continuously rising.
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