Wall Street closes in red and Dow Jones down 1.63% after Fed rate hike

Wall Street closed Wednesday in the red and the Dow Jones Industrials, its main indicator, fell 1.63%, as investors evaluate the latest move by the US Federal Reserve (Fed) to raise rates by a quarter point and analyze what the central bank’s next moves could be. At the close of trading, the Dow Jones was down 530.49 points to 32,030.11 and the S&P 500 lost 1.65%, or 65.90 points, to 3,936.97.

For its part, the Nasdaq composite index of the Nasdaq market, in which the main technology companies are listed, was down 1.60% or 190.15 units, to 11,669.96. Following the central bank’s latest decision to raise interest rates by 0.25 points, the major U.S. indexes rose, only to fall again.

Later, however, stocks declined after Fed Chairman Jerome Powell signaled during a press conference that a rate cut this year would was not part of the central bank’s “baseline expectation.” With this latest increase, interest rates are now in a range of 4.75% to 5%.

In the projections published along with its decision, the Fed indicated that the ultimate rate could end up in 2023 just above 5%, which points to limited room for further increases this year. In addition, Powell told a press conference that the recent turmoil in the banking sector could slow the economy – which could cool inflation and limit the Fed’s next steps.

“The banking problems simply confirm for us the evidence that things are likely to get worse before they get better” said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments, in remarks reported by The Wall Street Journal. U.S. Treasury Secretary Janet Yellen pledged Wednesday to work with Congress to hold accountable the executives responsible for the collapse of Silicon Valley Bank and Signature Bank, which sparked a banking crisis in the country.

“It is important to make it clear that shareholders and debt holders of the failed banks will are not protected by the government and that taxpayers will not pay for the losses of these banks,” Yellen stated during an appearance before a congressional committee.

All sectors closed in the red, with the biggest declines going to real estate and financials, with declines of 3.64% and 2.37%, respectively.. Among the thirty Dow Jones stocks, the red also dominated and the biggest losses were for Nike (-4.86%) and Boeing (-4.17%).

In other markets, Texas crude oil closed at 70.90 dollars a barrelAt the end of the stock market session, gold rose to 1,970 dollars per ounce, the yield on the ten-year US bond fell to 3.45%, and the dollar lost ground against the euro, with an exchange rate of 1.0868.