Wall Street had a rough session on June 17 after the Federal Reserve made it abundantly clear that rate cuts are no longer on the table, and rate hikes very much are.
The S&P 500 fell 1.21%, dropping 89.59 points to close at 7,421.76. The Nasdaq Composite took a harder hit, sliding 1.34% or 349.14 points to 26,027.21. The Dow Jones Industrial Average shed 0.98%, losing 499.18 points to end at 51,494.99.
The Fed’s hawkish pivot
The Fed, now led by Chair Kevin Warsh, held the federal funds rate steady. Nine out of 18 members of the Federal Open Market Committee now forecast at least one 25 basis-point rate hike before the year is out. For a market that spent much of the past year pricing in the opposite direction, this was a cold splash of reality.
Previous language that had hinted at potential rate cuts was scrubbed entirely from the policy statement. Market analysts widely interpreted this as a decisive hawkish shift in tone.
