After the Fed decided to raise interest rates by a quarter of a point, a decision discounted by the markets, US equity markets closed in negative territory: the DOW Jones lost 1.63% to 32,030.11, the
The S&P 500 fell 1.65% to 3,936.97, and the Nasdaq 100 fell 1.60% to 11,669.96.
Pending the Fed’s decision, US stock futures were flat on Wednesday morning. Dow Jones futures were down slightly from fair value, mainly held back by NKE stocks, while S&P 500 and Nasdaq 100 futures were up slightly.
Also, on Wednesday morning, WTI oil was down 0.6% to $69 a barrel after two positive sessions.
Recent events have influenced the Federal Reserve’s interest rate decision. Fed Chairman Jerome Powell and his team have faced one of the most challenging situations in years. By Wednesday morning, the odds of a quarter-point rate hike were assumed to be 87%.
The market expected a quarter-point hike in Federal Reserve interest rates in May, followed by a decline in the summer. The central bank was also expected to guide rate hikes, economic projections, and the rate decision.
In reality, expectations have been met, and the stock market was wild on Wednesday following the Federal Reserve’s decision to raise interest rates by 0.25%. The Fed’s goal was to address banking instability and instability concerns. In its subsequent statement to the policy change, the Fed suggested that the frequency of future federal funds rate hikes could be reduced.
Market swings intensified following Wednesday’s Federal Open Market Committee press conference. Powell was asked if he could guarantee the safety of all deposits. He explained that while it could not make such a promise, the Federal Reserve has put in place additional measures to prevent losses.
On Tuesday, the overall market was boosted as bank stocks rallied, causing all three major indices to finish higher. After an earlier session in which First Republic Bank shares fell more than 47%, it has rallied nearly 30% in value. At a conference on the banking sector, Treasury Secretary Janet Yellen discussed the possibility of the government stepping in to bail out depositors at other banks if needed.
On Wednesday, March 22, the Asian markets showed a positive trend. The focus was on the upcoming Fed meeting and whether the central bank prioritizes managing the organization or stabilizing financial markets after the bankruptcy and bailout of some mid-sized banks in the US. In the morning, Nikkei and Hong Kong markets were up almost 2%, and Shanghai was above parity.
To boost economic recovery, the People’s Bank of China unexpectedly announced a 25 basis point reduction in the reserve requirement ratio (RRR) for lenders. This is the first announcement of its kind this year. However, the cut will not apply to some institutions already implementing a 5% reserve ratio. The change will come into effect on March 27.
Price lists for Wednesday, March 22, 2023
DOW Jones -1.63% to 32,030.11
S&P 500 -1.65% to 3,936.97
NASDAQ 100 -1.60% to 11,669.96.