- The Federal Open Market Committee lifted the federal funds rate from 3.50% to 3.75%, with persistent inflation cited as the reason the prior US-Iran peace deal did not fully resolve price pressure.
- S&P 500 futures rose 0.69% and Nasdaq futures 0.87% on Thursday, a day after Wall Street ended lower following the Fed's hike.
- Fed Chair Kevin Warsh is an inflation hawk expected to abandon forward guidance, restructure the dot plot, and use alternative metrics, a shift that removes the transparency the market has relied on.
- Rising discount rates pressure high-multiple software and long-duration growth assets, while Big Tech faces more scrutiny on free cash flow against elevated AI capital expenditures.
- A Wall Street investment bank found energy and information technology stocks on average perform best one year after a Fed rate hike.
Quotes
“The S&P 500 faces a critical test as the Federal Open Market Committee (FOMC) is widely expected to raise the federal funds rate from 3.50% to 3.75% due to persistent inflation”
“Stock index futures were higher on Thursday, a day after Wall Street ended lower following the Federal Reserve's interest rate hike.”
“The investment bank found that stocks in the energy and information technology sectors on average perform the best one year after an interest-rate hike by the Federal Reserve.”