Tech boom sees markets rise as fed hikes interest rate 0.75 percentage points

US stocks surged higher than expected following the Fed‘s decision to raise interest rates for the second month in a row Wednesday — as investors continue to watch the market for clues as to the current state of the economy.

The increases saw the S&P, Nasdaq, and Dow all swell by as much as two percent after the highly anticipated move from the central bank, which saw it raise its key rate by .75 percentage points — its most recent attempt at quelling rampant inflation.

However, shares Wednesday proceeded to defy investors’ expectations, almost immediately after the agency’s afternoon meeting, partially thanks to a slight tech boon headed by industry leaders Microsoft and Google parent Alphabet. 

Both companies reported earnings that were better than investors had feared,  potentially fueling the market rise.

The rise came as a surprise to many who expected the maneuver to further hamper the US economy, as higher interest rates tend to negatively affect earnings and stock prices. Pictured is a trader on the floor of the NY Stock Exchange on Wednesday during the rise

As a result, the S&P 500 index was up 1.4 percent as of 3:07pm — an increase that more than made up for the benchmark index’s losses from the day prior amid some uncertainty about the Fed’s planned course of action. 

The Dow, meanwhile, was up 0.2 percent, and the tech-heavy Nasdaq Composite was up 2.5 percent. 

The development comes during a key week in financial markets, with traders around the world closely watching the interest-rate decision, the Fed’s main tool to fight inflation.

The number describes the short-term borrowing rate for commercial banks, which then passes that rate on to consumers and businesses.

The Dow Jones Industrial Average was up 0.2 percent and the tech-heavy Nasdaq Composite was up a whopping 2.5 percent Wednesday afternoon shortly after the Fed’s announcement

Investors will be watching for any clues from the agency for clues to any further interest-rate increases for the rest of the year, and whether officials will eventually reverse and cut rates next year. 

A planned press conference held by Fed Chairman Jerome Powell will likely shed more light on those plans – as inflation rates continue to rise to levels not seen in decades.

The Federal interest rate is now at 2.33 percent following Wednesday’s hike as the central bank acts aggressively to curb inflation, which hit 9.1 percent last month, the highest in 41 years. 

Officials expect three additional hikes by next year as the Fed is expected to hit its benchmark rate near 3.5 percent.

Chair Powell hopes that by making borrowing gradually more expensive, the Fed will succeed in cooling demand for homes, cars and other goods and services, thereby slowing inflation.

The markets’ performance Wednesday comes as a welcome sign for Powell and other members of the Central Bank.

The rise in interest rates will lead to American’s monthly mortgage, credit car, and loan payments to go up. The opportunity to save more is also available as savings accounts will see better returns

Federal interest rates were raised by 0.75 percent, again, on Wednesday, matching last month’s historic hike

Federal interest rates were cut to near zero to aid the country through the coronavirus pandemic in April 2020

Pictured: The breakdown of federal interest rate cuts and hikes by president since 1980