Stock markets in New York bounced slightly on Wednesday ahead of the Federal Reserve’s important interest rate decision. The central bank is expected to raise interest rates in the United States by 0.75 percentage points. That would be the largest increase since 1994.
Previously, an interest rate step of half a percentage point was expected, but the high inflation is forcing the Fed to take tougher measures.
The European Central Bank held an emergency meeting on Wednesday amid the turmoil in the bond markets. The ECB announced last week that it would raise interest rates in July and since then government bond yields, especially in southern euro countries, such as Italy, have risen sharply. As a result, they have to deal with higher borrowing costs. The ECB announced that it would come to the aid of these countries and develop a new instrument to tackle the interest rate differentials on government bonds of euro countries.
Shortly after opening, the Dow-Jones index was 0.9 percent higher at 30,627 points. The broad S&P 500 gained 1.1 percent to 3775 points and the tech gauge Nasdaq rose 1.3 percent to 10,970 points.
Oil and gas companies ExxonMobil and Chevron lost 0.4 and 0.7 percent. US President Joe Biden called on oil companies to increase production and ease the burden of high gasoline prices on consumers. The White House is under increasing pressure to cut costs for Americans. Biden also does not rule out a tax on excess profits for oil companies.
Qualcomm added 0.8 percent. The European Court of Justice cancels a fine of almost 1 billion euros that the European Commission imposed on the American chipmaker in 2018. According to the court, the company was unable to defend itself properly due to several “procedural irregularities”. Baidu rose 1.8 percent. The Chinese internet search engine is in talks to sell its majority stake in video streaming company iQIYI, according to Reuters news agency.
Moderna won 3.3 percent. A panel of the US drug regulator FDA has recommended approval of the pharmaceutical company’s corona vaccine for children ages 6 to 17. The FDA usually takes the advice of its experts.