news/AMZN/2023.02.01/Stocks rise, dollar falls after Fed hikes as expected.txt

*ADP employment softer than expected*Fed hikes by 25 basis pointsNEW YORK, Feb 1 (Reuters) - A gauge of global stocks
rose and the U.S. dollar and Treasury yields were lower on
Wednesday after the Federal Reserve raised its target interest
rate by the expected 25 basis points but communicated more
increases were on the horizon.The Fed said the U.S. economy was enjoying "modest growth"
and "robust" job gains, with policymakers still "highly
attentive to inflation risks" as it seeks to tighten financial
conditions and reign in high prices. Markets have been pricing
in the possibility of a rate cut by the Fed in the back half of
the year.On Wall Street, U.S. stocks were choppy after the Fed
announcement but rebounded to turn positive as Chair Jerome
Powell began to speak."The key thing the Fed is focused on is wages and we are
seeing wage inflation continue to ameliorate if you look at both
average hourly earnings and the employment cost index which just
came out, wages are beginning to soften, but they are not
softening enough to get inflation down to that 2% target," said
Ellen Hazen, chief market strategist at F.L.Putnam Investment
Management in Wellesley, Massachusetts."They had a very slightly dovish change in the language
where they previously had talked about determining the pace of
future increases and now they are talking about determining the
extent of future increases."Investors will now closely eye comments from Fed Chair
Powell for further signals on the path of the central bank's
policy.The Dow Jones Industrial Average fell 5.45 points, or
0.02%, to 34,080.59, the S&P 500 gained 30.83 points, or
0.76%, to 4,107.43 and the Nasdaq Composite added 173.22
points, or 1.5%, to 11,757.77.Before the policy announcement, economic data painted a
mixed picture, with a labor market that remains strong while
manufacturing activity continues to weaken, showing contraction
for a third straight month.Investors have viewed a weaker labor market as a key
component to bring down stubbornly high inflation.Earnings season also continues to roll on, with Facebook
owner Meta reporting earnings after the closing bell on
Wednesday. Later in the week will bring earnings from names such
as Apple and Amazon.Early gains for European shares faded to close virtually
unchanged ahead of the Fed statement, although industrial stocks
, up 0.85%, were a bright spot. On the heels of the Fed,
the European Central Bank (ECB) and Bank of England will make
their policy statements on Thursday, in which each is largely
expected to hike by 50 basis points.The pan-European STOXX 600 index closed down 0.03%
and MSCI's gauge of stocks across the globe
gained 0.81%.Data on Wednesday showed headline inflation in the euro zone
moderated to 8.5% in January, from 9% in December, while core
prices picked up to 7% from 6.9%, likely keeping pressure on the
ECB to raise interest rates aggressively.The dollar started February on a lower note, continuing its
weakening trajectory of the previous four months. The dollar
index fell 0.823%, with the euro up 0.99% to
$1.097.The Japanese yen strengthened 0.94% versus the greenback at
128.89 per dollar, while Sterling was last trading at
$1.2378, up 0.47% on the day.U.S. Treasury yields moved up after the statement but were
still lower on the day, as benchmark 10-year notes
were down 11.6 basis points to 3.413%, from 3.529% late on
Tuesday, although the two-year yield briefly turned higher after
the most recent batch of economic data.U.S. crude recently fell 2.93% to $76.56 per barrel
and Brent was at $82.91, down 2.98% on the day.(Reporting by Chuck Mikolajczak; editing by Jonathan Oatis and
Diane Craft)