Stock Market Today: Stocks Swing Wildly After Latest Fed Rate Hike

Stocks erased an early morning lead after the central bank indicated it will not begin to cut rates until 2024.

Federal Reserve Chair Jerome Powell
(Image credit: Getty Images)

Stocks traded modestly higher ahead of this afternoon's policy decision from the Federal Reserve. Prior to the announcement, individual stock news held investors' attention, with Delta Air Lines (DAL (opens in new tab)) rising 2.8% after the air carrier said it expects adjusted earnings per share to double and revenue to soar 20% in fiscal 2023. Additionally, SoFi Technologies (SOFI (opens in new tab)) jumped 6.1% after a regulatory filing showed CEO Anthony Noto bought $5 million shares in the fintech firm. However, gains for the major market indexes quickly disappeared after the Fed decision. 

Specifically, the Federal Reserve, as expected, lifted its benchmark interest rate by 50 basis points – marking a slowdown to the 75 basis point rate hikes it issued at the last four meetings. However, the central bank's "dot plot" – which summarizes the outlook of each individual official for the federal funds rate – indicated the potential to hike rates by an additional 75 basis points in 2023 and not begin to cut rates until 2024. 

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"The Fed did not welcome the disinflation trends that have just started to emerge and focused on robust job gains and elevated inflation," says Edward Moya, senior market strategist at currency data provider OANDA (opens in new tab). "Any hopes of a soft landing disappeared as the Fed seems like they are committed to taking rates much higher."

At the press conference following the Fed decision, Chair Jerome Powell affirmed that "ongoing increases will be appropriate" to reach price stability. The central bank chief added that based on dot plot projections, central bankers "overwhelmingly … believe inflation risks are to the upside."

The major market indexes, which were up roughly 0.7% ahead of the decision, were all down by more than 1% as Fed Chair Powell took the stage. Stocks erased some of these losses into the close, but the Dow Jones Industrial Average still finished down 0.4% at 33,966, the S&P 500 Index shed 0.6% to 3,995, and the Nasdaq Composite gave back 0.8% to 11,170.

Can These 3 Stocks Beat the Market?

Today's wild swings in reaction to the Fed decision just shows how difficult it has been to be an investor throughout 2022. And with an uncertain economic backdrop still looming, it's likely the challenging market environment will continue into the new year.

Still, the volatility creates exciting opportunities for stock pickers. And while deep pocketed players like Warren Buffett have access to research and insights that help them anticipate which stocks to buy and sell during big market swings, most retail investors do not.  

Enter Danelfin (opens in new tab). The analytics platform harnesses the power of big data technology and machine learning to analyze hundreds of fundamental, technical and sentiment data points per day for 1,000 U.S.-listed shares and 600 European-listed firms, then generates several stock picks that it views as highly likely to outperform the market over the next 30 to 90 sessions. 

So, what does Danelfin say investors should be buying now? These three dividend stocks are at the top of the platform's list of high scorers.

Karee Venema
Contributing Editor, Kiplinger.com

With over a decade of experience writing about the stock market, Karee Venema is an investing editor and options expert at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.