May 4, 2022 stock market coverage

Sen. Joe Manchin acknowledged that voters’ perceptions of the economy are dropping and argued that inflation — not abortion — will be the driving force in the midterm election, even as his own party is rallying against the leaked Supreme Court draft suggesting Roe v. Wade will be overturned as a defining issue.

“Inflation is the number one driving factor … I believe in my state right now it’s hurting everybody,” Manchin told CNN. He added that voters are more concerned about their pocketbooks than anything else.

“Follow the money,” Manchin said.

Manchin, who opposes abortion rights, told CNN he was studying how Brett Kavanaugh represented himself on the issue when the two met in 2018. Manchin was the lone Senate Democrat who voted for Kavanaugh.

“We are going back through all the things we have — we had meetings with him — to find out what he said and how it was actually presented to us. I had many conversations with him,” Manchin said.

Manchin said he didn’t know if Kavanaugh or Gorsuch lied to Congress. Yesterday he defended his vote for Kavanaugh in an interview with CNN.

Manchin did not rule out backing a narrower abortion rights bill now being discussed by Sens. Collins and Murkowski. “We are looking at everything,” he said.

US markets rallied sharply on Wednesday afternoon as the Federal Reserve Chair Jerome Powell announced a half-point rate hike but assured reporters that even bigger rate hikes are "not something the [Fed] is actively considering."

Markets had been relatively flat this week as investors held their breath ahead of the FOMC announcement, their collective sigh of relief appears to have finally lifted stocks into the green.

The Dow rose 903 points or 2.7% on Wednesday afternoon.

The S&P 500 was up by 2.8%.

The Nasdaq grew by 2.9%.

Federal Reserve Chairman Jerome Powell is typically considered humble but not self-deprecating. He gave a small sense of his humorous side Wednesday when he hinted at how the Fed underestimated the extent to which inflation would rise.

Stocks rose sharply after Federal Reserve Chairman Jerome Powell said the Fed wasn't considering rate hikes any larger than Wednesday's half-point increase.

Investors were most pleased. The Dow surged 600 points, or 1.8%. The S&P 500 was up 1.8% and the Nasdaq rose 1.6%.

Once inflation is in check, the Fed will continue hiking rates -- but at more typical quarter-point levels, Powell said.

"It is not like we would stop," Powell said. "We would just go back to 25 basis point increases."

The Fed is purposefully trying to slow down the economy to keep inflation in check. But some economists worry the central bank was too late to the game and is now acting so quickly to catch up that it risks sending America's economy into a recession.

Federal Reserve Chairman Jerome Powell said it won't be easy, but the Fed thinks it could avoid that scenario.

That's because America currently has an historically high number of job openings. That suggests demand for new hires could fall, Powell said, before workers get laid off.

The labor market is super strong and nowhere close to a downturn. Also consumer spending is strong, and businesses are in good financial shape.

"In principle, it seems as though by moderating demand, we could see vacancies come down, and as a result, they could come down fairly significantly, and I think put supply and demand closer together than they are at least, and that would give us a chance to have lower, to get inflation, wages down, and get inflation down, without having to slow the economy and have a recession, and have unemployment rise materially," Powell said.

That gives the Fed a shot at a "soft or softish landing" -- i.e. no recession. But it's not certain.

Federal Reserve Chairman Jerome Powell started his press conference today by speaking directly to Americans hurt by surging prices.

Federal Reserve Chairman Jerome Powell said the Fed isn't messing around with inflation. The central bank may have acted too slowly, many argue, but it is taking the threat seriously now and in the future.

Powell said half-point rate hikes like the one the Fed issued Wednesday could become the norm in the coming months.

The Federal Reserve clearly telegraphed Wednesday's half-point interest rate hike. Investors would have been stunned if the Fed raised rates by a higher, or even lower, amount.

But some economists were prepared to see at least one Fed member (likely the super-hawkish St. Louis Fed president James Bullard) dissent from the decision and vote for a bigger rate increase.

That didn't happen.

The decision to raise rates by "just" 50 basis points was unanimous. John Leer, chief economist at Morning Consult, said that was a surprise, given some of the rhetoric about inflation and the Fed being behind the curve.

Leer said that it seems the Fed wants to be more cautious with rate hikes because it does take time for higher rates to start impacting consumer spending.

"It's one thing to see what bigger rate hikes do to stocks, but it's another to see how this trickles down to the broader economy," Leer said.

It does seem that Fed chair Jerome Powell is aware of this. During the press conference after the rate hike was announced, Powell said that even bigger rate hikes are "not something the [Fed] is actively considering."

Investors were unsurprised by the Fed's first half-point rate hike in 22 years. If anything, investors cheered the action the Fed took against surging inflation -- and the fact that the central bank appears pleased with the state of the economy.

The Dow rose 120 points or 0.4%.

The S&P 500 was flat.

The Nasdaq fell 0.5%.