Wall Street opens higher after several days of whiplash

A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Thursday, Jan. 27, 2022. Asian stock markets tumbled by unusually wide margins Thursday after the Federal Reserve indicated it plans to start raising interest rates soon to cool inflation. (AP Photo/Kin Cheung)

A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Thursday, Jan. 27, 2022. Asian stock markets tumbled by unusually wide margins Thursday after the Federal Reserve indicated it plans to start raising interest rates soon to cool inflation. (AP Photo/Kin Cheung)

The Wall St. street sign is framed by the American flags flying outside the New York Stock exchange, Friday, Jan. 14, 2022, in the Financial District. Stocks are opening with solid gains on Wall Street Wednesday, Jan. 26, led by technology stocks after Microsoft reported standout results for its latest quarter. (AP Photo/Mary Altaffer)

A man wearing a face mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Thursday, Jan. 27, 2022. Asian stock markets tumbled by unusually wide margins Thursday after the Federal Reserve indicated it plans to start raising interest rates soon to cool inflation. (AP Photo/Kin Cheung)

Stocks are off to a solid start on Wall Street Thursday as markets settle down following several days of whiplash moves both up and down. Investors were encouraged to see strong figures for U.S. economic growth, which showed the biggest climb in GDP last year since 1984. The S&P 500 was up 0.9%, led by technology companies and banks. Other major indexes were up similar amounts. Markets are still processing the latest indications from the Federal Reserve a day earlier that the central bank is increasingly concerned about inflation and plans to raise interest rates and take other steps soon to fight it.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

BEIJING (AP) — Global stock markets and Wall Street futures sank Thursday after the Federal Reserve indicated it will raise interest rates soon to cool inflation.

London and Frankfurt opened lower. Market benchmarks in Tokyo and Seoul fell by an unusually wide margin of more than 3%.

The Fed said Wednesday in a statement that it “expects it will soon be appropriate” to raise rates. Investors expect as many as four increases this year, starting in March. Monthly bond purchases that push down long-term rates by injecting money into the financial system would be phased out in March, the Fed said.

“The Fed’s decision will reverberate globally, meaning that the era of low interest rate, ultra-low interest rate, is over,” said Francis Lun, CEO of Geo Securities in Hong Kong. “All the central banks will start to fight inflation instead of trying to stimulate the economy.”

In early trading, the FTSE 100 in London was down 0.2% at 7,452.31 and Frankfurt's DAX lost 1.5% to 15,233.46. The CAC 40 in Paris fell 1% to 6,918.14.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were down 0.5%.

On Wednesday, the S&P 500 ended down 0.1% following the Fed announcement after being up 2.2% earlier in the day.

The Dow Jones Industrial Average fell 0.4%. The Nasdaq composite ended little-changed, shedding a 3.4% gain earlier.

In Asia, the Nikkei 225 in Tokyo fell 3.1% to 26,170.30 and the Hang Seng in Hong Kong retreated 2% to 23,807.00.

The Kospi in Seoul sank 3.5% to 2,614.49 after a stunning market debut for LG Energy Solutions, one of the biggest makers of batteries for electric cars. It ended the day with South Korea's second-highest stock market value behind Samsung Electronics after its initial public offering drew 13 trillion won ($11 billion) in bids.

The Shanghai Composite Index declined 1.8% to 3,394.25 and Sydney's S&P-ASX 200 shed 1.8% to 6,838.30.

India's Sensex lost 0.8% to 57,423.10. New Zealand declined after inflation accelerated to a 30-year high of 5.9% over a year earlier in the final quarter of 2021. Jakarta advanced while Bangkok and Singapore fell.

On Wednesday, major Wall Street indexes rose immediately after the Fed statement but gave up their gains as Chair Jerome Powell took questions about how and when the central bank will let its balance sheet shrink after buying trillions of dollars of bonds through the pandemic. That would put upward pressure on market interest rates.

The selling accelerated as Powell acknowledged high inflation that has squeezed businesses and consumers isn’t getting better. That could force the Fed to get even more aggressive about raising rates and removing its support for markets.

The last time the Fed raised rates and shrank its balance sheet at the same time was in late 2018. The S&P 500 lost nearly 20%.

“Since the December meeting, I’d say the inflation situation is about the same but probably slightly worse,” Powell said.

Powell said there is room to raise interest rates without hurting the labor market, and wouldn’t rule out the possibility that the Fed could raise short-term rates at any of its seven remaining meetings this year or opt for a larger-than-usual increase at any one of them.

The Fed's near-zero interest rates helped to boost stock prices for nearly two years, but markets have been volatile since Powell and other officials in mid-December said plans to wind down economic stimulus might be accelerated to fight surging inflation.

In energy markets, benchmark U.S. crude lost 30 cents to $87.05 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.75 to $87.35 on Wednesday. Brent crude, the price basis for international oils, shed 39 cents to $88.35 per barrel in London. It advanced $1.76 the previous session to $89.96.

The dollar edged up to 115.00 yen from Wednesday's 114.55 yen. The euro declined to $1.1200 from $1.1254.

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Kim Tong-hyung in Seoul and Alice Fung in Hong Kong contributed.