Stock Market Today: Stocks Sink After Latest Fed Rate Hike
Stocks traded between positive and negative territory for most of Wednesday as investors anxiously awaited the Federal Reserve’s monetary policy decision this afternoon.
But the major indices went straight down after the Fed rose Interest charges by 0.25%, despite the central bank’s hint that rate hikes may be coming to an end.
Most of Wall Street expected the Fed to hike rates by 25 basis points, despite the recent turmoil in the financial sector following the collapse of several lenders, including Silicon Valley Bank, increased the likelihood that the central bank would pause. However, Federal Reserve Chair Jerome Powell said in a subsequent news conference that “inflation remains too high” and that the central bank “remains strongly committed to bringing down inflation”.
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Still in his policy statement (opens in new tab), the central bank said it “expects that additional monetary tightening may be warranted” to bring down inflation further, deviating from previous statements that mentioned “continued increases”. This — in addition to an updated economic forecast summary targeting a 5% to 5.25% peak interest rate versus the current rate of 4.75% to 5% — suggests that the central bank’s rate-hiking campaign will end sooner rather than later .
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The Fed’s recent rate hike had many of Wall Street’s top minds agree, including Jan Szilagyi, co-founder and CEO of the AI-powered market analysis platform Switch (opens in new tab). “The Fed is still in inflation war mode and has decided to use the window they have – 25 basis points wouldn’t be a huge shock to markets – to hike rates more slowly compared to 2022,” Szilagyi said. “Staying the course also signaled to the market that there is nothing ominous that the Fed knows the markets may not be aware of.”
In Single Stock News, GameStop (GME (opens in new tab)) rose 35.2% after the original meme stock and video game trader unexpectedly slipped into profit in the fourth quarter. This follows seven straight quarters in which the company posted a loss. GME also reported a drop in inventories, reflecting its “continued focus on maintaining a healthy inventory position,” the company said in its report press release (opens in new tab).
Big moves like this are “the name of the game for GameStop,” says David Wagner, portfolio manager at Aptus Capital Advisors (opens in new tab). “Short interest has been a driver of this stock for quite some time and will continue to be the case today.
As for the main indices, the Nasdaq Composite plummeted 1.6% to 11,669 S&P500 lost 1.7% to 3,936 and the Dow Jones industry average returned 1.6% to 32,030.
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We often talk about the importance of income-producing investments in this space, focusing primarily on the S&P 500’s Dividend Aristocrats. These are companies that have consistently increased their dividends annually for the past 25 consecutive years and are widely regarded as the The best dividend stocks around, at least when it comes to dividend growth.
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