Fed rate hike: did it help the stock market?

Fed officials yesterday announced the Fed rate hike of 0.75% to slow the economy due to the inflation rate that is affecting the country’s economy.

There has been a lot of speculation from stock analysts and pundits that there will be market gains following the Fed’s rate hike, much like its earlier announcements. However, it did not fully materialize.

The top 2 stocks, S&P 500 and Dow Jones, both lost 1.7% while the NASDAQ fell 1.8%. Federal Reserve chief Powell said, “Restoring price stability is critical to setting the stage for achieving maximum employment and long-term stable prices. We will continue until we are satisfied that the job is done.

Stock market after the Fed rate hike. (Photo: New York Times)

In an article published in Yahoo finance‘Treasury yields continued their perilous climb on Wednesday, with the rate-sensitive 2-year Treasury rising above 4.1% – the highest level since 2007. The benchmark US 10-year note held steady at above 3.5%, its highest level since 2011.

Charlie Ripley, senior investment strategist at Allianz Investment Management, said in a note: “You can only steer the ship into the storm for so long, but there comes a time when you have to batten down the hatches and with the third consecutive base of 75 Fed. rise in point rates over the past four months, market participants should look for cover to weather the coming storm. Overall, today’s political action largely reflects the economic backdrop and to slow the economy, the Fed clearly needs to be aggressive.


Edward N. Arrington