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The stock market moved higher on Wednesday as investors nervously look ahead to the conclusion of the Federal Reserve’s upcoming policy meeting, with the central bank now expected to hike interest rates by a more aggressive 75 basis points in an effort to deal with surging inflation.


Stocks bounced back Wednesday morning after five losing sessions in a row: The Dow Jones Industrial Average rose 0.7%, over 200 points, while the S&P 500 gained 1.2% and the tech-heavy Nasdaq Composite 2%.

After a much hotter-than-expected inflation report last week—with consumer prices jumping 8.6% in May compared to a year ago, experts are now calling on the Fed to hike rates more aggressively than previously forecast.

Markets are now overwhelmingly betting on a 98% chance of a 75-basis-point rate hike, with a 0% chance for a smaller 50-basis-point rate hike—down from 86% a month ago, according to CME Group’s FedWatch tool .

The last time the Federal Reserve raised interest rates by 75 basis points was under the leadership of Alan Greenspan in November 1994, when the central bank orchestrated a soft landing and avoided a recession despite hiking rates seven times in 13 months.

Investors will be watching closely for any new hints on the path for monetary policy going forward when Fed Chair Jerome Powell gives a press conference later in the day.

Rates on government bonds moderated somewhat on Wednesday after surging higher earlier in the week, with the 2-year and 10-year Treasury yields recently hitting their highest levels since 2007 and 2011, respectively.