US stocks experienced a significant drop in response to the Federal Reserve’s announcement that it may not reduce interest rates as much as previously anticipated. Despite the desires of Wall Street, the S&P 500 declined by 0.9% or 41.75 points, reaching 4,402.20. The Dow Jones Industrial Average also fell by 0.2% or 76.85 points, settling at 34,440.88. Additionally, the Nasdaq composite experienced a decline of 1.5% or 209.06 points, reaching 13,469.13. As expected, the Fed maintained its main interest rate at the highest level witnessed in over two decades. Furthermore, the officials indicated the possibility of another increase in the federal funds rate later this year, with Fed Chair Jerome Powell acknowledging that inflation is approaching its peak.
Of particular note to the market is the Fed’s statement that it may only reduce rates by half a percentage point next year. This represents a shift from three months ago when a full percentage point of cuts was anticipated for 2024. Higher interest rates often have a negative impact on high-growth stocks, which is evident as Big Tech companies experienced significant declines. Apple, Microsoft, and Nvidia fell by 2%, 2.4%, and 2.9%, respectively. Additionally, the stocks of various newly public companies also declined. Instacart dropped by 10.7% as it surrendered some of its initial gains from its debut as a public stock. Arm Holdings also experienced a decline of 4.1%.
Initially, stocks remained relatively steady following the release of the Fed’s forecasts but began sliding later in the afternoon. Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, suggests that the market will be impacted by this development. He states, “As you move further and further away from the meeting, the message may sink in.” However, Powell highlighted that the forecasts can change in response to new data on inflation and the economy. Powell also emphasized that the Fed has already raised rates quite rapidly, allowing for more time before future decisions are made.
(Read more stock market stories.)
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
