October 4, 2022

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Wall Street fell after the rate hike - E24

Wall Street fell after the rate hike – E24

The US central bank raises interest rates by 0.75 percentage points. US stock markets fell dramatically.

Wall Street is nervous ahead of today’s interest rate meeting.
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Wall Street immediately sent benchmarks lower, after the US central bank, the Federal Reserve (Fed), announced a jump in interest rates. Since then, US stock exchanges have alternated between ups and downs.

In the end, it ended with a wide drop among the leading indicators:

  • The Dow Jones index fell by 1.70 percent
  • The Nasdaq fell 1.79 percent
  • The S&P 500 fell 1.71 percent

The market thought the Fed would cut interest rates at the end of 2023, but they won’t. Interest rates will increase further throughout the year, says chief economist Harald Magnus Andresen at Sparebank 1 Markets.

Andreessen says the central bank has raised the cap on the interest rate range from 3.8 to 4.6 per cent. At the end of the year, the bank expects an interest rate of 4.4 percent, according to the chief economist.

Today we moved to the lowest level of what we would call a cap rate, so there is a way to go, says Central Bank Governor Jerome Powell during the press conference following the rate decision.

The entertainment company is collapsing

18 of the top 20 losers on the S&P 500 were travel and leisure companies. The sectors worst affected by the economic downturn are, CNBC writes.

Caesars, the hotel and casino giant, had its toughest time, dropping about 7.5 percent.

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Raise the interest rate three times

The US central bank, the Federal Reserve, led by Central Bank President Jerome Powell, announced a 0.75 percentage point increase in interest rates on Wednesday evening. It is in line with analysts’ expectations.

This brings the interest rate to 3.0 – 3.25 percent, the highest rate since 2008.

The Federal Reserve has already made two consecutive rate hikes of 0.75 percentage points. In the past four months, the interest rate has been adjusted upward from nearly zero. The increases are three times what is often considered a “normal” upward adjustment of 0.25 percentage point.

These moves come at a time of rising inflation and robust wage growth in the United States.

Ahead of the rate meeting, Stephen Miller, a market veteran and investment advisor at GSFM, gave a clear message.

Close all sales of stocks and bonds. The next 24 hours are uncertain. Markets had already acted in pessimism ahead of the meeting, he told Bloomberg.

– Don’t try anything

The interest rate meeting is being held at a time when inflation is constantly rising. In August, US consumer prices rose 8.3 percent – slightly less than the previous month, but still above market expectations.

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The market fears that a higher interest rate will push the economy into a recession, a so-called “hard landing”. Powell stated that he will continue to raise interest rates until inflation is brought under control. Tonight, the face of the interest rate and signals regarding a future rate hike will be announced.

Some people take it all in big strides.

Don’t try to do anything before the meeting. Go to bed and get up early. Grab your morning cup of coffee and check out Powell’s speech, Woori Bank’s Min Gyeong-Won tells Bloomberg.

In other key numbers from the US, used home sales fell 0.4 percent from July to August. The sales pace was last seen in June 2020, and 20 percent lower than the same period last year. From June to August, prices typically fall by about 2 percent, reports CNBC, but this year prices are down about six percent.