Wall Street falls after Fed interest rate announcement

A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA on September 13, 2022. REUTERS/Andrew Kelly

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  • The Fed raises rates by 75 bps to a range of 3-3.25%
  • The terminal rate is seen at 4.6% in 2023
  • Indices looked up after the Fed announcement
  • Declines accelerate in the final 30 minutes of trading

Sept 21 (Reuters) – Wall Street’s major indexes fell in the final 30 minutes of trading on Wednesday as investors absorbed the Federal Reserve’s latest interest rate hike and future policy commentary.

At the end of its two-day meeting, the central bank raised its policy rate by 75 basis points for the third time to a range of 3.00-3.25%. Most market participants expected such a hike, seeing only a 21% chance of a 100 bps rate hike before the announcement.

However, policymakers called for even bigger increases in the new projections, which saw the policy rate rise to 4.40% by the end of this year and 4.60% in 2023. This is up from the June forecasts of 3.4% and 3.8% respectively. . read more

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No rate cuts are expected until 2024, the central bank said, adding that any smart investor would expect the central bank to bring inflation under control in the near term.

Markets moved back and forth after the 2pm ET announcement as investors digested the news, with a mix of expected and somewhat unexpected, respectively, in the form of the size of the rate hike and the path to future increases.

The declines accelerated in the final 30 minutes of trading.

“Based on inflation reports and recent governor comments, markets are already ready for some hawkishness,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

“But it’s always interesting to see how the market reacts to messaging. Hawkishness is to be expected, but some in the market are taking comfort from it while others are taking a sell position.”

According to preliminary data, the S&P 500 (.SPX) It lost 66.25 points, or 1.72%, to end at 3,789.68 points, while the Nasdaq Composite (.IXIC) It lost 205.16 points or 1.80% to 11,219.89. Dow Jones Industrial Average (.DJI) It fell 524.24 points or 1.71% to 30,181.99.

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Reporting by Medha Singh, Devik Jain and Angika Biswas in Bangalore and David French in New York; Editing by Marguerita Choi

Our Standards: Thomson Reuters Trust Principles.

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