📈 Will you get serious about investing in 2025? Take the first step with 50% off InvestingProClaim Offer

U.S. stocks fall as Treasury yields climb; higher rates in focus

Published 21/09/2023, 16:16
© Reuters.
EUR/USD
-
USD/CHF
-
USD/SEK
-
USD/NOK
-
US500
-
DJI
-
FDX
-
GS
-
DRI
-
CL
-
IXIC
-
US90274J5618=UBSS
-
US10YT=X
-
DXY
-

Investing.com -- U.S. stocks were falling and Treasury yields were rising after the Federal Reserve signaled it will keep interest rates higher for longer, including the possibility of one more increase this year.

At 11:09 ET (15:09 GMT), the Dow Jones Industrial Average was down 173 points or 0.5% while the S&P 500 was down 1% and the NASDAQ Composite was down 1.2%.

The main indices closed lower on Wall Street Wednesday, as the blue-chip Dow Jones Industrial Average dropped just over 75 points, or 0.2%, the broad-based S&P 500 fell 0.9% and the tech-heavy Nasdaq Composite especially hard hit, falling 1.5%. 

Fed takes a hawkish stance

The Federal Reserve held interest rates steady on Wednesday, but still forecast another hike of 25 basis points before the year’s end. 

Additionally, the U.S. central bank updated its quarterly projections showing interest rates falling only a half of a percentage point in 2024 compared to the one percentage point of cuts suggested at the meeting in June.

Goldman Sachs (NYSE:GS) now expects the Fed to begin its interest rate-cutting cycle in the fourth quarter of next year, later than an earlier forecast of a cut in the second quarter.

"Today, participants appeared to move away from the view that monetary policy tightening could weigh on growth with a long lag next year, which weakens one argument for cutting," Goldman Sachs said, in a note.

"We think this means that inflation will have to fall further than we previously assumed for the FOMC to cut."

While there isn’t inflation data for investors to digest today, weekly jobless claims came in at a lower than expected 201,000 last week. In addition, the Philadelphia Fed manufacturing index was a negative 13.5, a far lower than expected reading. Analysts had expected negative 0.7.

The 10-year Treasury yield reached 4.48%.

Varied central bank decisions in Europe

In Europe, Sweden’s Riksbank and the Norges Bank hiked interest rates as expected, while the Swiss National Bank kept its main policy rate unchanged at 1.75%, ending its run of five consecutive increases since it began lifting rates out of negative territory in June 2022.

The Bank of England kept rates at 5.25% after raising rates 14 successive times.

FedEx soars on guidance lift

In corporate news, Darden (NYSE:DRI) Restaurants, owner of the Olive Garden and other chains, beat profit expectations. Pharmacy chain Rite Aid (NYSE:RAD) reports after the closing bell.

Additionally, FedEx (NYSE:FDX) stock jumped 4.2% after the shipping company lifted its annual earnings guidance, while marketing automation firm Klaviyo (NYSE:KVYO) dipped 0.5% on Thursday after its trading debut on Wednesday.

Crude hit by Fed stance

Oil prices dropped sharply Thursday, pulling further back from recent highs after the Fed’s warning on higher U.S. interest rates raised concerns of a further hit to economic activity, potentially denting crude demand.

Data from the U.S. Energy Information Administration, released on Wednesday, showed crude inventories fell just over two million barrels last week, well short of the 5.25 million barrel drop the industry body American Petroleum Institute had reported a day earlier.

The Fed’s hawkish stance also led to the U.S. dollar surging to its highest since early March, making commodities such as oil which are denominated in dollars more expensive for buyers using other currencies.

(Oliver Gray contributed to this item.)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.