Fed's First Hike Since 2023
On Wednesday, the Federal Reserve lifted its benchmark federal funds rate by a quarter percentage point, bringing it to 3.75%-4% — its first increase since July 2023, and one that all officials backed. The central bank also signaled one more quarter-point move before year-end. Although markets had expected the decision, stocks first moved higher and then turned lower as Chair Kevin Warsh stressed that price pressures remain stubborn during his post-meeting briefing.[S1]
Warsh described inflation as excessively high and said it had stayed that way for an extended period, noting that summertime price data showed no real easing in underlying trends. Meanwhile, the 10-year US Treasury note's yield pushed back above the closely watched 5% mark, hovering near 5.02%.[S1]
Wall Street Closes Mostly Lower
Wall Street finished Wednesday mostly in the red. The Dow Jones Industrial Average shed 631.33 points, or 1.21%, closing at 51,461.78. The S&P 500 slipped 33.92 points, or 0.45%, to 7,551.81, and the Nasdaq Composite ended essentially unchanged at 25,978.43. Bank stocks drove the pullback on worries that additional rate increases and costly borrowing could curb lending and slow the economy. Bank of America, Wells Fargo, Goldman Sachs and Citigroup each dropped roughly 3%, while JPMorgan Chase shed about 1%.[S1]
Intel's stock climbed following reports that the American chipmaker was in discussions with South Korean memory manufacturer SK Hynix about producing semiconductors on US soil, which helped cushion losses on the tech-heavy Nasdaq. The dollar index added roughly 0.6% to reach 100.21, its strongest reading since late July. Gold futures slipped 0.6% to $4,266 an ounce, and US benchmark West Texas Intermediate crude tumbled 3.7% to $101.87 a barrel.[S1]
European Markets End Higher
European equities closed Wednesday in positive territory, with technology shares pacing the advance before the Fed's rate decision was announced. The STOXX Europe 600 gained 0.46% to 637.09 points. Britain's FTSE 100 added 0.28% to 10,688.47, Germany's DAX put on 0.53% to 25,537.75, and France's CAC 40 climbed 0.62% to 8,140.59. Italy's FTSE MIB posted the biggest rise among the region's main benchmarks, up 0.8% to 51,969.12, while Spain's IBEX 35 also advanced 0.41% to finish at 19,635.80.[S1]
