Mixed Movements of US Stocks on Fed’s Decision: Impact and Expectations

The movements of US stock indices varied after the Federal Reserve’s decision to fix the interest rate at a range of 5% – 5.25%, and its chairman, Jerome Powell, expected more hikes before the end of the year, as the Nasdaq and S&P 500 indices rose, while the Dow Jones index declined, although the markets It still reflects that the bank’s expectations have not been met.

During trading on Wednesday, the most famous index in the world lost more than two-thirds of a percentage point, while the Nasdaq index rose by 0.39%, and the S&P 500 index ended the day’s trading near the point at which it began, albeit in the green zone.

For the first time in 11 meetings, the Fed’s members decided to hold the federal funds rate steady, with the aim of giving themselves and the markets some breathing room and assessing the impact of the most aggressive policy tightening the US market has seen since the 1980s.

The decision of today’s meeting came in line with most of the market’s expectations, after the world’s largest central bank raised the interest rate on its funds by 500 basis points, in an attempt to curb the largest wave of inflation hitting the country in more than four decades.

Jerome Powell, President of the Bank, hinted at the possibility of making two more hikes this year, with a total value of half a percent, and confirmed that the decisions of the upcoming meetings were not addressed in this meeting.

In Europe, despite the closure of its markets before the announcement of the US Federal Reserve’s decision, European stocks rose today, Wednesday, with the support of stocks of banks and mining companies, due to widespread expectations of stabilizing US interest rates.

The Stoxx Europe 600 index ended the day’s trading up 0.4%.

Banks, which tend to benefit from higher interest rates, rose 1.1%. The Italian Banks Index rose 0.9%, and the Spanish Banks Index rose 1.1%, leading indices gains in major countries in the region.

Mining stocks led the sector’s gains, up 2.3%, with an increase in copper prices due to the decline in the dollar, and expectations of increased stimulus to support economic growth in China, the main consumer of the metal, raised morale, according to Reuters.

London’s FTSE 100 closed up 0.1%.

In a related way, oil prices fell 1.5% on Wednesday, after the Federal Reserve announced that it expected more interest rate increases this year, which raised market concerns about the demand for crude, just hours after government data showed an unexpectedly large increase in oil stocks. American raw.

Brent crude futures closed down $1.09, or 1.5%, at $73.20 a barrel, while US West Texas Intermediate crude fell $1.15, or 1.7%, to $68.27 upon settlement.

Both benchmarks rose more than 1.5% earlier in the session. And they increased more than 3% in the last session, amid expectations of a rise in fuel demand after the Chinese central bank cut the short-term lending rate.