Additional Coverage:
- Stock market today: Dow drops 1,123 points and bond yields soar as markets adjust rate outlook after Fed meeting (newsbreak.com)
Fed’s Rate Hike Outlook Dampens US Stocks
The Federal Reserve raised interest rates by 0.25% but projected only two further cuts in 2025, disappointing investors and sending US stocks tumbling.
Bond Yields Surge
The 10-year Treasury yield soared as the Fed’s projections indicated a more hawkish stance on interest rates. Traders adjusted expectations, seeing a lower chance of a rate cut in January.
Fed Signals Caution
Fed Chair Jerome Powell said the central bank would be cautious about further rate cuts, citing the need for progress in reducing inflation and maintaining a strong labor market.
Markets React Negatively
The S&P 500 lost nearly 3%, while the Dow Jones Industrial Average fell over 2.5% in its longest losing streak in 50 years. Nasdaq composite dropped over 3.5%.
Analysts Weigh In
Experts believe the Fed’s reduced rate cut projections and hawkish commentary point to a prolonged period of higher interest rates. Some on Wall Street question the Fed’s decision to cut rates given recent inflation data.