Home Market News Nasdaq, S&P fall more than 1%, Dow slides a day after Fed's 'hawkish pause'

Nasdaq, S&P fall more than 1%, Dow slides a day after Fed's 'hawkish pause'

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Nasdaq, S&P fall more than 1%, Dow slides a day after Fed's 'hawkish pause'
crash of the stock exchanges

franckreporter

It was another rough day for U.S. stocks as they continued to slide following the Federal Reserve’s announcement of higher interest rates. The 10-year Treasury yield surged, reflecting the market’s belief that rates will remain high for an extended period.

Yesterday, Wall Street reacted negatively to the Fed’s updated dot plot, which indicated the possibility of another rate hike this year and fewer rate cuts in 2024. Fed Chair Jerome Powell emphasized that a soft landing was not guaranteed, contributing to the market’s downward trend.

The tech-heavy Nasdaq Composite was hit the hardest, declining 1.19% to 13,307.77 points. The S&P 500 slipped 1.09% to 4,354.09 points, while the Dow dropped 0.66% to 34,214.41 points.

Cisco Systems experienced significant losses after announcing its acquisition of cybersecurity firm Splunk for $28 billion, causing shares of Splunk to soar by approximately 21%. Meanwhile, most sectors of the S&P 500 were in negative territory, with Real Estate and Consumer Discretionary being the biggest losers. The only sector that saw gains was Utilities.

Despite positive signs in the labor market, such as a decrease in initial jobless claims to 201,000, the Fed’s tightening campaign still raised concerns. Powell acknowledged that although the labor market had improved, there is still a shortage of workers.

Other economic data also contributed to market sentiment, including a decrease in existing home sales, worse-than-expected Philly Fed business outlook for September, a slip in the U.S. leading indicator index, and an unexpected narrowing of the U.S. current account deficit.

In a similar move, the Bank of England also decided to keep interest rates steady, following lower-than-expected consumer inflation in the UK.

Treasury yields increased, with the 10-year yield jumping by 12 basis points to 4.47%. The 2-year yield, which is more sensitive to interest rate decisions, rose by 2 basis points to 5.14%.

Overall, the market reacted to the Fed’s “hawkish hold” by selling off, demonstrating investors’ cautious outlook for future rate hikes.

On a positive note, FedEx’s strong quarterly profit beat caused its stock to rise by more than 4%.

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