Fed Hikes Rates for First Time Since 2023, Cybersecurity Stocks Shine

The Federal Reserve raised interest rates for the first time in three years, hiking the benchmark federal funds rate by 25 basis points to 3.75%-4.00% on September 16.

This move was unanimous, with every voting member of the Federal Open Market Committee agreeing that inflation pressures warranted action. Consumer prices have exceeded the Fed's 2% target for an extended period, made worse by geopolitical tensions and rising energy costs.

The S&P 500 closed down 0.45% at 7,551.81, with bank stocks taking a significant hit. Bank of America and Wells Fargo each dropped roughly 3%, while Goldman Sachs and American Express fared even worse, falling about 4% apiece.

Cybersecurity stocks, however, displayed notable relative strength, with CrowdStrike seeing unusual options activity as traders rotated into the sector driven by escalating concerns over AI-driven cybersecurity threats.