US equity markets saw declines across the board on Thursday, with tech stocks taking the lead, following the Federal Reserve’s decision to maintain current interest rates.
The S&P 500 Index (NYSE:GSPC) declined by 1.1%, after already losing nearly 1% the previous day. The Dow Jones Industrial Average (NYSE:DJI) experienced a lesser drop of 0.6%, while the Nasdaq Composite (NASDAQ:IXIC) led the downturn with a 1.3% slide.
Investors are coming to terms with a “higher for longer” interest rate scenario as predicted by the Federal Reserve’s outlook. There’s ongoing debate about the duration of this “longer” period, especially since another rate hike may be on the horizon later this year according to the central bank. Goldman Sachs has now postponed its prediction for a Fed rate cut to Q4 2024, adding to investor anxieties about the potential impact on equities and bonds.
Thursday saw the yield on the 10-year Treasury note touch its highest levels in over 15 years, signaling investor concerns about the influence of prolonged high-interest rates on the market.
Fed Chair Emphasizes Data-Dependence
Jerome Powell, Chair of the Federal Reserve, emphasized in his press briefing that any future policy changes would be driven by economic data. U.S. jobless claims, as of last week, are at their lowest levels since January, showcasing a strong labor market.
The Bank of England also decided to maintain its rates on Thursday, halting a series of 14 consecutive hikes due to an unanticipated inflation slowdown. Among other European central banks, the Swiss National Bank chose to keep its rates stable, while Norway’s central bank hinted at a possible rate hike in December.
FedEx Corporation (NYSE:FDX) shares experienced a surge following the company’s quarterly profits surpassing expectations.
As Wall Street grapples with the prospect of enduring elevated interest rates, all eyes will be on the Fed’s future meetings and economic indicators to gauge the market’s direction.
Featured Image – Freepik
Author Kristen Moran 
