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Wall Street Slides as Fed Hikes Rates, Warsh Warns on Inflation
(MENAFN) US stocks finished mostly lower Wednesday after the Federal Reserve raised interest rates for the first time in over three years, with Chair Kevin Warsh cautioning that inflation remains stubbornly elevated.
The Dow Jones Industrial Average dropped 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, while the Nasdaq Composite held nearly flat at 25,978.43.
The Fed voted unanimously to lift its federal funds rate by 25 basis points, bringing it to a range of 3.75%-4%—its first increase since July 2023. Policymakers also signaled one more quarter-point hike is likely before year's end.
Markets initially rallied on the widely expected decision but reversed sharply after Warsh stressed ongoing price pressures during his post-meeting news conference.
"The plain fact is that inflation is too high, and has been for too long," Warsh said, noting that summer inflation data showed no meaningful improvement in underlying trends.
The yield on the benchmark 10-year US Treasury note pushed back above the psychologically critical 5% mark, trading around 5.02%.
Banking stocks bore the brunt of the selloff amid fears that continued rate hikes and higher borrowing costs could squeeze lending and slow economic growth. Shares of Bank of America, Wells Fargo, Goldman Sachs and Citigroup each fell roughly 3%, while JPMorgan Chase slipped about 1%.
Intel shares bucked the trend, climbing on reports that the US chipmaker is in talks with South Korea's SK Hynix about manufacturing semiconductors on US soil—a bright spot that helped cushion losses on the tech-heavy Nasdaq.
The US dollar index rose roughly 0.6% to 100.21, its highest level since late July. Gold futures slipped 0.6% to $4,266 per ounce, while US benchmark West Texas Intermediate crude tumbled 3.7% to $101.87 per barrel.
European markets close higher on tech gains
European stocks ended Wednesday's session in positive territory, lifted by technology shares ahead of the Fed's rate announcement.
The STOXX Europe 600 index gained 0.46% to close at 637.09 points. Britain's FTSE 100 rose 0.28% to 10,688.47, Germany's DAX added 0.53% to reach 25,537.75, and France's CAC 40 climbed 0.62% to 8,140.59.
Italy's FTSE MIB posted the strongest performance among major European benchmarks, up 0.8% to 51,969.12, while Spain's IBEX 35 rose 0.41% to finish at 19,635.80.
The Dow Jones Industrial Average dropped 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, while the Nasdaq Composite held nearly flat at 25,978.43.
The Fed voted unanimously to lift its federal funds rate by 25 basis points, bringing it to a range of 3.75%-4%—its first increase since July 2023. Policymakers also signaled one more quarter-point hike is likely before year's end.
Markets initially rallied on the widely expected decision but reversed sharply after Warsh stressed ongoing price pressures during his post-meeting news conference.
"The plain fact is that inflation is too high, and has been for too long," Warsh said, noting that summer inflation data showed no meaningful improvement in underlying trends.
The yield on the benchmark 10-year US Treasury note pushed back above the psychologically critical 5% mark, trading around 5.02%.
Banking stocks bore the brunt of the selloff amid fears that continued rate hikes and higher borrowing costs could squeeze lending and slow economic growth. Shares of Bank of America, Wells Fargo, Goldman Sachs and Citigroup each fell roughly 3%, while JPMorgan Chase slipped about 1%.
Intel shares bucked the trend, climbing on reports that the US chipmaker is in talks with South Korea's SK Hynix about manufacturing semiconductors on US soil—a bright spot that helped cushion losses on the tech-heavy Nasdaq.
The US dollar index rose roughly 0.6% to 100.21, its highest level since late July. Gold futures slipped 0.6% to $4,266 per ounce, while US benchmark West Texas Intermediate crude tumbled 3.7% to $101.87 per barrel.
European markets close higher on tech gains
European stocks ended Wednesday's session in positive territory, lifted by technology shares ahead of the Fed's rate announcement.
The STOXX Europe 600 index gained 0.46% to close at 637.09 points. Britain's FTSE 100 rose 0.28% to 10,688.47, Germany's DAX added 0.53% to reach 25,537.75, and France's CAC 40 climbed 0.62% to 8,140.59.
Italy's FTSE MIB posted the strongest performance among major European benchmarks, up 0.8% to 51,969.12, while Spain's IBEX 35 rose 0.41% to finish at 19,635.80.
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