By STAN CHOE
AP Business Writer
NEW YORK (AP) -- Stocks rose in roller-coaster trading on Wall Street Wednesday following the Federal Reserve's sharpest hike to interest rates since 1994, and its assurance that such mega-hikes would not be common.
The S&P 500 was 1.3% higher in afternoon trading after several sudden moves up and down immediately after the Fed's announcement. Treasury yields were sharply lower but also jerked up and down as investors struggled to digest the third interest-rate hike of the year and what Chair Jerome Powell said about future moves.
The Dow Jones Industrial Average swung between a gain of 530 points and a loss of nearly 180 before sitting on a gain of 344 points, as of 3 p.m. Eastern time. It was up 1.1% at 30,709, while the Nasdaq composite was 2.5% higher.
The Fed hiked its key short-term interest rate by three-quarters of a percentage pint, triple the usual move, in its quest to beat back high inflation. Powell said the Fed may consider an increase of either half a point or three-quarters of a point at its next meeting in July before increases may fall back to more normal amounts.
"The Fed is serious about inflation," said Brian Jacobsen, senior investment strategist at Allspring Global Investments. "Instead of trying to let it naturally fall they want to give it a good shove even if it means slowing growth" for the economy.
Investments around the world, from bonds to bitcoin, have tumbled this year as high inflation forces the Federal Reserve and other central banks to swiftly remove supports propped underneath markets early in the pandemic. The fear is that too-aggressive hikes in interest rates will force the economy into a recession.
The Fed is "not tying to induce a recession now, let's be clear about that," Powell said. He said Wednesday's big increase was about the Fed speeding up the move to get interest rates back to normal more than anything, calling it "front-end loading."
Treasury yields have shot to their highest levels in more than a decade on expectations for a more aggressive Fed, though they eased Wednesday following Powell's comments. A disappointing report showing that sales at U.S. retailers unexpectedly slumped in May from April contributed. So did a weaker-than-expected report on manufacturing in New York state.
The economy is still largely holding up amid a red-hot job market, but it has shown some signs of distress recently. A preliminary reading on consumer sentiment last week, for example, sank to its lowest reading on record due in large part to high gasoline prices.
A week ago, almost no one was expecting a hike of three-quarters of a percentage point, which is the widespread expectation for this afternoon. But a stunning report on Friday sent shudders through markets when it showed inflation at the consumer level unexpectedly accelerated last month.
Markets were more relaxed Wednesday, with stocks climbing across Europe and some of Asia.