Fed Raises Interest Rates as US Market Holds Steady Amid Inflation Fears
The US stock market remained steady on Wednesday after the Federal Reserve announced its decision to raise interest rates for the first time in three years. The move is aimed at controlling high inflation, which has been a concern for the nation since the COVID-19 pandemic.
Despite higher interest rates tending to slow economic growth and undercut stock prices, investors seem to be prioritizing getting inflation under control. The S&P 500 rose 0.4% on Wednesday, its second gain in eight days, while the Dow Jones Industrial Average was up a mere 8 points.
The Fed's decision also received support from easing oil prices and pressure from the bond market. Brent crude fell by 2.9%, to $105.58 per barrel, after concerns about the war with Iran began to ease. The yield on the 10-year Treasury bond dropped to 4.94% from 5.00% late Tuesday.
A report released earlier in the day showed that US retailers saw a significant increase in sales last month, which could indicate that the economy remains strong enough to withstand higher interest rates. Stocks in the artificial-intelligence industry also held steady after their recent decline, with Nvidia rising 1.9% and Advanced Micro Devices climbing 4%.