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April 7 (UPI) — U.S. markets bounced back from two consecutive days of losses as investors continued to process the Federal Reserve’s latest statements on its monetary policy.
The Dow Jones Industrial Average gained 87.06 points, or 0.25%, while the S&P 500 rose 0.43% and the Nasdaq Composite closed up 0.061%.
Markets fell on Tuesday and Wednesday after Federal Reserve Governor Lael Brainard said the Fed must “rapidly” shrink its balance sheet to battle rising inflation and notes from the Fed’s March meeting showed that officials “generally agreed” the central bank should shrink its balance sheet by $95 billion per month.
“The reality is we are in uncharted waters here and the Fed has a difficult task in unwinding the tremendous monetary support over the past couple years,” Allianz Investment Management senior investment strategist Charlie Ripley said, according to Yahoo Finance.
“Against this backdrop, it is highly conceivable that uncertainty in the path of monetary policy will remain embedded in markets and that is exactly what we have been witnessing with the most recent moves in interest rates and risk assets.”
Investors turned their attention toward defensive names such as consumer staples and healthcare companies, with Costco stock rising 3.98% and Walmart gaining 1%, while Merck rose 2.14%, Procter & Gamble gained 1.26% and UnitedHealth Group climbed 0.98%.
“The moves are not surprising,” Timothy Lesko, senior wealth advisor at Mariner Wealth Advisors said. “You have a marketplace that is trying to get its head around what valuations should be in a higher interest rate environment.
“Every piece of economic news that comes out changes that forward expectation at the margin, and the market needs to figure that out.”
