Fed Rate Hike Triggers Volatile Week on Wall Street
Wall Street closed out a volatile week, marked by mixed results across major indexes. The Dow Jones Industrial Average fell 1.69% to 51,681 on Friday, while the S&P 500 ended nearly flat at 7,650.
The Nasdaq Composite rose 0.72%, buoyed by a late-week rebound in semiconductor shares, which bucked the trend of other rate-sensitive sectors. The CBOE Volatility Index dropped 6.5% to 14.81, signaling a renewed sense of calm following the Federal Reserve's interest-rate increase.
The Fed raised the federal funds rate by 25 basis points to a target range of 3.75-4 percent on Wednesday, as expected. Officials signaled that this was not the last hike, with 16 of 18 Federal Open Market Committee participants expecting at least one more increase this year.
Stocks initially rallied on the decision, but bond traders were less convinced, leading to a selloff in the middle of the week. However, sentiment turned around by Thursday as investors digested the Fed's resolve and interest rates stabilized.