Buffalo, NY (WBEN) Investors appeared generally pleased with the Fed's decision to raise interest rates Wednesday as the Dow gained back 300 points after 3 straight sessions of losses. Dow futures, however, are sharply lower Thursday and those gains are set to be erased.
Locally, Michael Angelucci of Level Financial Advisors says investors feel the Fed is doing what it needs to do to fight inflation. "The irony is that you think that raising interest rates would be bad, and it is for initially for investments because it decreases the value of those future investments," explains Angelucci. "Initially, stocks and bonds go down. But now that the Fed has been aggressive, the market thinks that the interest rates will either taper off in the future or do enough to keep interest rates down, which then in turn, helps the market."
For those intending on borrowing to buy a house, Angelucci says expect the rates to stay where they are for a while. "We've talked a little bit about in the past where we've seen this and that mortgage rates have doubled in the past five to six months," says Angelucci. He believes the Fed is going to stay steady, until they're really confident that inflation is under control.
Angelucci says investors think the Fed is going to get inflation under control. He says that will not require a more aggressive rate hike later. Another reason Angelucci says investors like the move. "If they do get inflation under control sooner rather than later, it's less of a probability of recession, which is bad for everybody the markets within consumer." says Angelucci.
The S&P rose 1.5% after several sudden moves up and down immediately after the Fed's announcement.
