In a move that sent ripples through global markets, US stocks experienced a significant decline on Wednesday following the Federal Reserve’s decision to leave key interest rates unchanged while hinting at the possibility of rate hikes later this year. The central bank also revised its economic projections upwards but issued a warning that the battle against inflation was far from over.
US Stocks Tumble: The S&P 500 index took a hit, losing 42.02 points, or 0.95%, closing at 4,401.93 points. The Nasdaq Composite followed suit, falling 209.62 points, or 1.53%, and finishing at 13,468.57. Meanwhile, the Dow Jones Industrial Average shed 78.13 points, or 0.23%, closing at 34,439.60.
In a statement, the Federal Open Market Committee (FOMC) emphasized that officials would assess the “extent of additional policy firming that may be appropriate.” Fed Chair Jerome Powell stated, “The Fed is prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective.”
The 10-year treasury yield inched up to 4.39% from 4.37% late Tuesday, while the 2-year treasury yield surged to 5.18%.
The tech sector took a hit as shares of Microsoft, Apple, and Nvidia all dropped by at least 2%. Instacart saw a substantial plunge of 10.7%, and Arm Holdings fell by 4.1%.
Currencies experienced fluctuations, with the US dollar strengthening against the Japanese yen, rising to 148.03 from 147.86. Against the euro, the dollar also gained ground, climbing to $1.0686 from $1.0677.
European shares, on the other hand, managed to rise as government bond yields across the continent fell. The pan-European STOXX 600 index added 0.9%. Key European indices, including Britain’s FTSE 100, which edged up 0.9% at 7,731.65, Germany’s DAX, which rose 0.8% at 15,781.59, and France’s CAC 40, which added 0.7% at 7,330.79, all displayed positive gains. Real estate stocks led the pack with a 2.2% increase, while Eurozone banks surged by 2%, driven by UniCredit‘s 4.7% rally.
In Canada, stocks saw a slight reversal, ending down on Wednesday. The Toronto Stock Exchange’s S&P/TSX composite index closed down 4.2 points, settling at 20,214.69. The energy sector on the TSX declined by 1.4% as oil prices experienced a 1% loss.
Asian share markets also witnessed a decline, with Hong Kong’s Hang Seng Index falling 0.6% to 17,885.60, China’s Shanghai Composite losing 0.5% at 3,108.57, and Japan’s Nikkei 225 edging down 0.7% to 33,023.78. South Korean shares ended the day flat, while Australia’s S&P/ASX 200 index closed 0.5% lower at 7,163.30. New Zealand’s benchmark S&P/NZX 50 index fell 0.2% to 11,324.82.
Energy prices saw fluctuations as well, with the US crude oil benchmark for October delivery falling 92 cents to $90.28 a barrel, and Brent crude for November delivery losing 81 cents to $93.53 a barrel. Natural gas for October delivery fell 12 cents to $2.73 per 1,000 cubic feet.
In the precious metals market, gold for December delivery gained $13.40 to reach $1,967.10 an ounce, while silver for December delivery added 38 cents, closing at $23.84 an ounce.
These market movements reflect the uncertainty surrounding the Federal Reserve’s future decisions and their potential impact on global financial stability, as investors continue to monitor inflation and interest rate developments closely.
