Stock market experiences extreme volatility following interest rate hike

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The S&P 500 traded lower in a roller-coaster week on Wall Street as investors digested another Federal Reserve interest rate hike and a mixed batch of earnings reports.

On Wednesday, the Federal Reserve announced it’s raising its fed funds interest rate target by 0.5% to a new range of between 0.75% and 1%. The decision marked the first time the Fed has issued a rate hike of 0.5% or larger in more than 20 years.

The stock market experienced extreme volatility following the interest rate hike. The Wednesday announcement triggered a 900-point relief rally in the Dow Jones industrial average on Wednesday, its best single-day performance since 2020. Unfortunately, the Dow lost more than 1,000 points on Thursday, its worst single-day loss since 2020.

FILE – The Wall St. street sign is framed by the American flags flying outside the New York Stock exchange, Friday, Jan. 14, 2022, in the Financial District. Wall Street is off to a mixed start on Wednesday, May 4, and bond yields are rising as traders look ahead to an announcement later in the day on interest rates from the Federal Reserve. (AP Photo/Mary Altaffer, File) ORG XMIT: NYBZ302

On Friday, the Labor Department reported the U.S. economy added 428,000 jobs in April, beating economist estimates of 400,000 jobs. The Labor Department also revised its previous jobs estimates for February and March, lower by a total of 39,000 jobs.

WTI crude oil prices climbed above $108 per barrel on Friday for the first time in over a month on concerns that a new round of European Union sanctions on Russian oil could further restrict a tight global oil supply.

Bump in the road

Lyft shares crashed nearly 30% on Wednesday and are now down more than 51% year-to-date after the ride-hailing company issued second-quarter guidance that fell short of analyst expectations.

In the week ahead, first-quarter earnings season rolls on with reports from Sony and Fox on Tuesday and Occidental Petroleum and Walt Disney on Wednesday.

S&P 500 Energy sector earnings are up 257.8% year-over-year for the first quarter so far, by far the largest earnings growth of any market sector, according to FactSet.

Economic numbers

In the coming week, investors will get more key economic updates on Wednesday when the U.S. Labor Department releases its Consumer Price Index reading for April and on Friday when the University of Michigan releases its U.S. Consumer Sentiment Index reading for May.

Benzinga is a financial news and data company headquartered in Detroit.

This article originally appeared on Detroit Free Press: Stock market experiences extreme volatility after interest rate hike