Stock Market Today, Sept. 16: Stocks Slip as Fed Raises Rates
The Nasdaq Composite (NASDAQINDEX:^IXIC) slipped 0.01% to 25,978, the S&P 500 (SNPINDEX:^GSPC) fell 0.45% to 7,551, and the Dow Jones Industrial Average (DJINDICES:^DJI) lost 1.21% to 51,462 as investors processed the first interest rate hike in three years.
Gold fell 0.67% to $4,263.91 as of U.S. market close, and the 10-year Treasury yield rose 0.03% to 5.02%. Industrials led session gains while energy and financial services lagged.
Today's biggest moves
Artificial intelligence (AI) stocks recovered slightly today as value buying helped stabilize tech markets following the Fed decision. Dell, Intel, and Nvidia all finished the day in the green. Intel gained on news reports of a potential chip deal with SK Hynix, though SK Hynix later clarified that no decisions have been made.
What this means for investors
As expected, the Federal Reserve raised interest rates by 25 basis points to a target range of 3.50%-3.75% today. It was the first hike since 2023, and Fed Chairman Kevin Warsh took a hawkish tone as he stressed the committee's commitment to reducing inflation. Stocks fell as traders began to price in a stronger possibility of further rate hikes.
Higher rates often pressure equities because the increased cost of borrowing can slow growth. Goldman Sachs research shows that, on average, the S&P 500 declined by 2% in the months immediately after a rate hike. However, there's an average 9% gain in the following year. Every situation is different, but long-term investors might take solace in the knowledge that most previous rate-related sell-offs have been short-lived.
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Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends Goldman Sachs Group, Intel, and Nvidia. The Motley Fool has a disclosure policy.
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