Fed Rate Hike Sparks Market Rebound Amid Inflation Concerns

US markets made a sharp turnaround on Thursday after the Federal Reserve's interest rate hike. The Fed increased its key rate by a quarter of a percentage point, bringing it to a target range of 3.75%-4.00%. This move is aimed at controlling stubbornly high inflation, which has remained a concern for the economy.

The rate hike will likely lead to higher borrowing costs for consumers and businesses, affecting mortgages, auto loans, and credit cards. The Fed also signaled that it could raise interest rates again in the future, with some projections suggesting a second increase to 4.1%.

Despite the initial decline in US stock market indices after the announcement, futures for major indices like the S&P 500, Dow Jones Industrial Average, and Nasdaq are now showing signs of recovery. The two-year US Treasury yield slipped to 4.72%, while the 10-year Treasury remained near 5.00%.