June 17, 2024

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The Dow is falling after the Federal Reserve raised interest rates and more hikes are expected over the next year

The Dow is falling after the Federal Reserve raised interest rates and more hikes are expected over the next year

Stocks gave up earlier gains and fell on Wednesday as investors digested the Federal Reserve’s latest interest rate hike as part of its efforts to crush inflation.

The Dow Jones Industrial Average fell 140 points, or 0.4%. The Dow Jones was 287 points higher earlier in the day. The S&P 500 fell 0.7%, while the Nasdaq Composite lost 1%.

Fed A widely expected interest rate hike of 50 basis points At the conclusion of the policy meeting in December. It is a smaller rise than the previous four consecutive hikes in interest rates by 75 basis points. A basis point is one percent.

Fed officials also expected a rate hike to 5.1% before it ends this hiking cycle, perhaps a little higher than what traders expected. The Fed has also projected that it will keep interest rates higher through 2023, with no cuts until 2024.

Notably, the FOMC left in a key part of the policy statement that it “expects that continued increases in the target range will be appropriate.”

The yield on the benchmark 10-year Treasury note rose more than 3 basis points to 3.538%, after falling below the 3.5% level earlier in the day.

Investors will analyze comments from Federal Reserve Chair Jerome Powell for more clues about what’s to come from the central bank in 2023. Traders have been sensitive to Powell’s language in previous meetings this year, interpreting his tone as hawkish or dovish.

“With more and more evidence that inflationary pressures have plateaued, if not completely peaked, Chairman Powell’s comments at this afternoon’s press conference will help determine whether the S&P 500 can surpass – and build upon – 4100 its next important level. ,” Quincy Crosby, chief global strategist at LPL Financial, said in a note on Wednesday.

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Stocks are emerging from a winning session, fueled by a cooler-than-expected inflation report that suggested the Fed may be one step away from stopping interest rate hikes or turning to cuts in its battle against inflation.