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. Last Updated: 07/27/2016

Wall Street Stocks Soar After Fed Increases Interest Rates

NEW YORK -- Wall Street appeared convinced last week that the U.S. Federal Reserve might be close to ending its string of interest rate hikes but upcoming data on the economy and corporate earnings could easily give investors another bout of indigestion.

Last Thursday, the Fed made its expected quarter-point increase on short-term lending rates, the 17th consecutive raise in two years.

But in its accompanying statement, the central bank seemed to ease its stance on future rate hikes and acknowledged that the economy was moderating.

The change in language soothed Wall Street's concerns that the Fed might lift rates too high and topple the economy. Stocks soared, giving the Dow Jones industrial average its biggest one-day jump in more than three years.

But while the Fed may have moved a step closer to the end of its rate tightening, investors should not get ahead of themselves, said Michael Sheldon, chief market analyst for Spencer Clarke LLC. Rates could keep climbing if inflation shows signs of accelerating, he said.

"As the Fed has said, future rate hikes will depend on economic data over the next several weeks," Sheldon said. "Investors do need to face the fact that the Fed might have more work to do."

For that reason, Wall Street will likely continue its obsession over the economy with key data on manufacturing and employment this week.

And with the second-quarter earnings season starting soon, companies will begin issuing revised profit forecasts, early indicators of whether rising interest rates and energy costs have affected their bottom lines.

However, those data come during a week shortened for Independence Day. While stocks last week finally showed signs of bouncing back from the market's recent plunge, light volume is expected with many traders on vacation this week.