Last Updated 4:05 PM EST
Stock indices finished today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 fell 0.42%, 0.6%, and 0.79%, respectively.
The communications sector was the session’s laggard, as it lost 1.33%. Conversely, the healthcare sector was the session’s leader, with a gain of 0.16%.
Furthermore, the U.S. 10-Year Treasury yield decreased to 3.48%, a decrease of more than two basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 4.22%. This brings the spread between them to -74 basis points.
Last updated 3:20 PM EST
The volatility continues as stocks alternate between positive and negative. As of 3:20 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.1%, 0.2%, and 0.2%, respectively.
Stocks Turn Red after Fed Rate Hike
Last updated 2:11 PM EST
Stocks tank after the Federal Reserve hiked interest rates today. This is likely attributable to the central bank’s summary of economic projections, which showed that expectations for the fed funds rate increased from September’s forecast. The Federal Reserve also expects real GDP for 2023 to fall.
As of 2:11 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.2%, 0.3%, and 0.5%, respectively.
Last updated 11:50AM EST
Markets opened higher on Wednesday as investors awaited the decision regarding interest rates with the FOMC meeting scheduled to take place in the afternoon.
Last updated 8:45AM EST
Stock futures continued to be in the red as investors awaited the decision regarding the Federal Reserve’s latest interest rate hike.
First published 7:08AM EST
Stock futures were in the red early on Wednesday ahead of the Federal Reserve’s latest interest rate hike.
On Tuesday, the stock market jumped at the stronger-than-expected inflation reading for November. The Consumer Price Index (CPI) for November came at 7.1% as compared with economists’ expectations of 7.3%. Investors took it as a signal that inflation may have peaked. The S&P 500, the Dow, and the Nasdaq 100 gained 0.73%, 0.3%, and 1.09%, respectively, at the closing bell.
What Awaits on Wednesday
The Fed is expected to announce a half-point interest rate hike at the end of its 2-day FOMC meeting on Wednesday. This would come as a welcome change after four consecutive three-quarter-point hikes and may spark a market rally.
Investors will also keep a close watch on the tone Fed Chair Jerome Powell used during his speech on Wednesday. The speech will disclose the central bank’s updated views on the market and its outlook for 2023. If Powell remains hawkish, there is a high possibility of a panic sell-off. Either way, markets are expected to remain volatile at least until the interest rates start coming down again, something which is unlikely to happen in 2023 at least.
How Investors Should React
A recession in 2023 is not entirely off the table, and it will be wise for investors to stay prepared and not give in to market fluctuations. The Fed has not made any comments backing the optimism, and CEOs of major companies still contemplate a recession, however mild or sharp.
Moreover, the U.S. Treasury yield curve still stands inverted (the interest rate offered by short-term Treasury is higher than long-term rates), a classic indicator of an impending recession.
At this time, it may be prudent for short or medium-term investors to turn to value stocks paying dividends, rather than growth stocks.