Stocks Soar As Fed Raises Rates As Expected  Image: Bigstock Stocks soared yesterday after the Fed raised interest rates by 50 basis points as expected. They also said they will begin reducing their balance sheet by $30 billion per month for the next 3 months (beginning June 1), and then increase that to $60B per month after that. The market really took off when Fed Chair, Jerome Powell, said the committee is "not actively considering" raising rates by 75 basis points. Instead, he said 50 basis points was on the table for the next couple of meetings. He also gave the bulls more reason to cheer when he said that the economy looks "solid" for the rest of the year, and that there's "nothing about it that says we're close or vulnerable to a recession." All of the major indexes made sessions highs into the close with the Dow up 2.81%, the S&P up 2.99%, and the Nasdaq up 3.19%. As expected, the Fed announcement was indeed a bullish event, as the market saw the Fed's moves as aggressive enough to combat inflation, but not overly aggressive as to harm the economy. The lows that we've seen in recent days appeared to be pricing in a recession. But yesterday's rally, as a result of the Fed's actions and words, make those fears appear to be far lesser now. And with the market feeling markedly oversold, stocks could see a lot of upside catching up to do. In other news, MBA Mortgage Applications rose 2.5% with purchases up 4.1% and refi's up 0.2%. Motor Vehicle Sales climbed to 14.3 million units (annualized) vs. last month's upwardly revised 13.4M and views for 13.9M. And the ADP Employment Report estimated that there were 247,000 new private payroll jobs created last month. That was under their expectations for 398K. But it was yet another month of strong job gains. But the jobs report the market is really interested in is Friday's official Employment Situation report by the Bureau of Labor Statistics (BLS). That one's looking for 400,000 new jobs being created last month (390K in the private sector and 10K in the public), with the unemployment rate holding steady at 3.6% (a nearly 50-year low). Before that, however, we'll get Weekly Jobless Claims this morning, along with the Challenger Job-Cut report. Yesterday's rally saw all of the major indexes extend their gains from their correction lows. While the markets are still down from their all-time highs, and for the year -- with worries over a recession and stagflation receding, now is the time to start planning for the next leg up. Because the lower prices and lower valuations won't last forever. To learn how to take full advantage of the recent pullback, be sure to read our latest commentary... Bull Markets, Corrections, Recession And Stagflation Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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