Wall Street rises as concerns over interest rate increase

The gains in the technology and industrial sectors helped the US stock market recover after a two-day drop, as investors reacted to the prospect of higher interest rates this year. The minutes of the Fed’s last meeting showed on Wednesday that policymakers were more confident of the need to keep interest rates up, with inflation likely to rise.

However, comments made by the Federal Reserve Chairman James Bullard earlier in the day seem to ease some of these concerns. US Treasury yields for 10 years have fallen, after reaching their highest level in more than four years. Bullard noted that central bankers need to be careful not to raise interest rates too quickly this year, as that could slow down the economy a lot.

Wall Street’s fear index was the “VIX volatility index” at 18.58 points and the index jumped above 21 points after minutes Today, investors have become more comfortable with the possibility of raising interest rates three rather than four times. In spite of a tight federal outlook, US short-term interest rate bets continued to reflect expectations of a three-year rate hike this year. Traders also gave 94% a chance to raise prices for the first time in March. US economic data showed that jobless claims fell more than expected, reaching a 45-year low over last week.

The Dow Jones Industrial Average rose by 1.02%, to 25.050 points, supported by gains from United Technologies and Boeing. United shares rose by 3.2% after its chief executive said that the company was exploring a break-up in its portfolio. The Standard & Poor’s 500 Index was up by 0.75%, at 2,721 points, and the Nasdaq Composite Index rose by 0.64%, to hit 7.264 points. Both indexes benefited from the gains made by Amazon, Apple, Microsoft and Facebook. All 11 major S & P sectors were up, with the energy index growing by more than 2%. Oil prices rose by more than 1%, after data showed a sudden construction in stocks. The Chesapeake Energy Index was the biggest gainer of the index, jumping 19% after the company posted a quarterly profit.

The number of gaining shares outnumbered the dropping ones on the New York Stock Exchange by 1,949 to 803. On Nasdaq, the number of shares was up to 1,558, while the number of shares at 1,1158 shares.