Equity markets got a dose of good news on Wednesday when the FOMC hiked interest rates by 50 basis points. The increase was expected and came with a tame outlook compared to what the market was fearing. Fed Chief Jerome Powell indicated an aggressive 75 basis point increase was off the table for now and that a series of 50 basis point hikes should be expected. The risk for the market now is that inflation will continue to rise despite the onset of interest rate hikes and force the FOMC to up its game once again. If history is any indication, the Fed will have to spark a recession to get inflation under control.

The S&P 500 surged more than 3.0% on the news confirming support at the key 4200 level. So long as this level continues to show support the index will remain range-bound or possibly move to a new high. While there are many risks ahead, the outlook for the 2nd half continues to expect supply chain improvements that should drive revenue and earnings for the S&P 500.