When Will the Fed Pull the Trigger on Next Rate Hike?


After a brief stumble two weeks ago, their first decline in seven weeks, U.S. equities resumed their winning ways last week. The gain was not robust, just 0.2 percent as measured by the S&P 500, but it came in a week when the Federal Reserve raised interest rates for the second time in three months. In contrast, the December rate hike was the first in twelve months. And despite the now growing belief that three rate hikes this year are a distinct possibility, bonds rallied along with stocks, as investors interpreted the Fed’s stance to be somewhat less hawkish than feared.

Stocks Unfazed by Looming Rate Hike


U.S. equities recorded their sixth week of gains, propelled by solid increases following the president’s speech to Congress on Tuesday evening. The conventional tone of the speech engendered a rise of confidence that spilled over into markets worldwide. The S&P 500 added 1.4 percent on Wednesday alone, while the EuroStoxx 50 index added 2.1 percent, and the Nikkei gained 1.4 percent.

Waiting for Clarity on Taxes and the Fed

The rally in U.S. stocks just kept on going last week. The S&P 500 added another 0.7 percent, extending its climb to five straight weeks and leaving it ahead on the year by 5.7 percent at a record high of 2367.