Fed Hikes Rates Amid Inflation Concerns

The Federal Reserve raised interest rates for the first time in three years, increasing the key rate to a target range of 3.75%-4.00%. This quarter-point hike aims to combat stubbornly high inflation and could lead to higher borrowing costs for mortgages, auto loans, and credit cards.

Futures for U.S. stock market indices initially declined following the Fed's announcement but are now pointing towards a rebound on Thursday. The S&P 500 futures rose 0.8%, while Dow Jones Industrial Average futures gained 0.7%, and Nasdaq futures climbed 1.1%.

The two-year U.S. Treasury yield fell to 4.72% on Thursday, but the 10-year Treasury yield remained near 5.00%. The U.S. dollar also dropped to 155.64 Japanese yen from 156.26 yen. Oil prices are dropping due to limited oil flows in the Strait of Hormuz and Saudi Arabia's pipeline closure.