Wall Street's main indexes returned to positive territory in mid-afternoon trading on Wednesday after a brief wobble in the immediate aftermath of the Federal Reserve's rate announcement which had also forecast rates remaining higher for longer.
At the end of its two-day meeting, the Fed lifted its policy rate by 75 basis points for the third time to a 3.00-3.25% range. Most market participants had expected such an increase, with only a 21% chance of a 100 bps rate hike seen prior to the announcement.
However, policymakers also signaled more large increases to come in new projections showing its policy rate rising to 4.40% by the end of this year before topping out at 4.60% in 2023. This is up from projections in June of 3.4% and 3.8% respectively.
Wall Street opens lower as Fed poised to hike key rate
"The market's initial reaction is due to the dot plot," said Thomas Hayes, chairman and managing member of Great Hill Capital.
"Participants had expected maybe late 2023, they would kind of cut back or ease off (on rate hikes), and based on their expectations today, they're going to be higher for longer and the initial reaction is the market doesn't like it."
However, after initially giving up earlier gains and sinking in the minutes after the 2 p.m. ET announcement, US indexes clawed their way back into the black.
By 2:43 p.m. ET (1843 GMT), the Dow Jones Industrial Average rose 74.52 points, or 0.24%, to 30,780.75, the S&P 500 gained 16.08 points, or 0.42%, to 3,872.01 and the Nasdaq Composite added 63.40 points, or 0.55%, to 11,488.45.
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