The Dow Jones Industrial Average closed up more than 500 points on Wednesday (September 21) after the Federal Reserve raised interest rates by 0.75% and pledged to keep raising interest rates until 2023 to curb interest rates and inflation.
The Dow Jones Industrial Average closed at 30,183.78, down 522.45, or -1.70%, the S&P500 closed at 3,789.93, down 66.00, or -1.71%, and the Nasdaq closed at 11,220.19, down 3,789.93.
The Fed raised its short-term interest rate by 0.75% to 3.00-3.25 percent at its meeting yesterday. This is an increase of 0.75% in the interest rate in three consecutive meetings. This was the tightest monetary policy move since the Fed designated short-term interest rates as a key monetary policy tool in 1990. The 3.00-3.25% policy rate is now the highest level since 2008.
In its policy interest rate forecast (Dot Plot), Fed officials forecast that interest rates will reach 4.4% by the end of the year and 4.6% by the end of 2023, up from the June 2023 forecast. They said that interest rates would reach 3.4 per cent at the end of the year and 3.8 per cent by the end of 2023.
The Dot Plot also said that Fed officials expect no rate cuts until 2024, dashing investors’ hopes that the Fed will be able to curb inflation in the near term.
In addition, investors are worried that the rate increase will affect the economy. Given the Fed’s expectations at this meeting that the US economy will only grow by 0.2% at the end of the year and 1.2 percent in 2023.
All 11 stocks in the S & P 500 closed in negative territory, led by luxury goods, with Ralph Lauren down 2.02 percent, Nike down 2.47 percent, and Capri Holdings down 1.12 percent.Capri was formed by the merger between Michael Kors and Gianni Versace.
Technology stocks are sensitive to falling interest rates too Apple was down 2.03 percent, Meta Platforms was down 2.72 percent, Amazon was down 2.99 percent, Microsoft was down 1.44 percent, and Alphafeet was 1.84 percent .
Travel business stocks also fell. Expedia (Expedia), an online travel platform, fell 5.37 percent, Delta Air Lines fell 4.85 percent, American Airlines was down 5.3 percent, United Airlines was down 5.37 percent, Carnival Corp Down 6.72%, Royal shares Caribbean Cruises down 5.44%.
For US economic data reported last night. The National Association of Realtors (NAR) said home sales fell 0.4 percent to 4.80 million units in August. compared monthly which is the lowest level since November 2015 and this is the 7th month in a row
The US Mortgage Bankers Association (MBA) said the number of mortgage applicants rose 3.8 percent last week. Even the mortgage interest rate rose. The number of applicants for home equity loans rose by 1% last week.
