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Dow tumbles 500 points after Fed officials hint at possible rate hike
New York Post • • business
Key Points:
- US stocks fell sharply on Wednesday due to speculation that the Federal Reserve may raise interest rates this year to combat inflation, with the Dow dropping 1%, the Nasdaq down 1.4%, and the S&P 500 falling 1.2%.
- The Fed's latest projections showed that half of its policymakers expect at least one rate hike in 2024, causing market uncertainty and increased Treasury yields, with the 10-year yield rising to 4.49% and the two-year yield jumping to 4.21%.
- Fed Chairman Kevin Warsh signaled a shift away from "forward guidance," aiming for markets to respond directly to economic data rather than Fed hints, and suggested potential changes to the Fed's quarterly projections.
- Despite the market volatility, the Fed kept the federal funds rate steady at the current meeting, continuing its pause after several hikes earlier in the year.
- Oil prices stabilized following earlier declines due to optimism around a tentative US-Iran deal that could reopen the Strait of Hormuz, with Brent crude rising 0.7% to $79.55 per barrel, easing inflation concerns.
