Stocks gain as Fed official backs quarter-point hike

STORY: When the Fed speaks, the market listens. And on Thursday, Wall Street liked what it heard.

Credit this man: Atlanta Federal Reserve President Raphael Bostic, who sparked a relief rally in stocks when he said he preferred a “slow and steady” approach by the Fed to taming inflation.

That sent Wall Street’s main indexes, which had started the day slow, ending in positive territory. The Dow gained one percent, and the S&P and Nasdaq each added roughly three-quarters of a percent.

Bostic on Thursday said the Fed should stick with "steady" quarter-point rate increases, arguing that the impact of higher interest rates on the U.S. economy may only begin to "bite" in earnest this spring. Some traders had begun to price in a half-point hike by the Fed at its next meeting this month.

Data on Thursday also showed that the number of Americans filing new unemployment claims fell again last week, indicating continued strength in the labor market – something that won’t last, says Heartland Advisors CEO Will Nasgovitz.

“It looks as though we’re going to see a deterioration in the job market. S&P 500 earnings is a good leading indicator of job openings – that appears to be rolling over. National Association of Independent Business’ intentions for adding employment has clearly plummeted – that’s usually a leading indicator of unemployment going higher. So perhaps the market’s saying that we’re seeing the last gasp of strength in the employment market and perhaps then the Fed will be relenting down the road.”

Monthly payrolls and consumer prices data in the coming days will offer investors more clues on how aggressive the central bank may be.

As for individual movers, Salesforce soared 11.5% to notch its biggest one-day percentage gain since August 2020, after the cloud-based software firm forecast first-quarter revenue above analysts' estimates and doubled its share buyback to $20 billion.

Tesla fell nearly 6% after Chief Executive Elon Musk and team's four-hour presentation failed to impress investors with few details on its plan to unveil an affordable electric vehicle.

And Macy's jumped 11% after the department store chain forecast full-year profit above Wall Street’s estimates.