On Sept. 16 (local time), the Dow Jones Industrial Average ended at 51,461.90, down 631.21 points, or 1.21%, from the previous session. The Standard & Poor's 500 fell 33.92 points, or 0.45%, to 7,551.81, while the Nasdaq Composite slipped 3.15 points, or 0.01%, to 25,978.42.
Among the largest companies by market capitalization, Microsoft fell 1.37%, Amazon lost 0.99%, Google parent Alphabet dropped 0.61%, Micron declined 0.11% and SanDisk shed 0.71%. Nvidia (0.82%), Apple (0.32%), TSMC (1.23%), SpaceX (5.15%), Facebook parent Meta (0.46%), Broadcom (0.07%), Tesla (0.42%) and SK hynix (0.02%) rose despite the broader decline.
Stocks opened mixed as investors awaited the outcome of the Fed's Federal Open Market Committee meeting, then turned lower across the board when news of the rate increase emerged during the session. Markets reacted more sharply to the Fed's signal of possible additional tightening than to the rate hike itself, which had been largely anticipated. The yield on the 10-year U.S. Treasury note, the bond market's benchmark, rose 0.0224 percentage point to 5.0180%, while the policy-sensitive two-year yield climbed 0.0728 percentage point to 4.7360% on prospects of near-term tightening. The 30-year yield, by contrast, fell 0.0065 percentage point on expectations that the Fed's decision would cool long-term inflation.
The Fed said the FOMC voted unanimously to raise rates by 0.25 percentage point. It was the first increase in three years and two months, since July 2023. The Fed cut rates at three consecutive meetings from September to December last year, then held them steady five times this year. In the summary of economic projections' dot plot — the quarterly chart mapping policymakers' rate forecasts — Fed officials put the median year-end rate at 4.1%, signaling one more increase could come this year.
Fed Chair Kevin Warsh told a news conference after the meeting that "this policy action will contribute to returning inflation to the Fed's 2% target in a timely manner," stressing that the central bank "will achieve price stability." He added that "inflation has run above target for more than five years," and that "the clear fact is that inflation is too high and has been too high for too long." Warsh cited a stronger U.S. economy, still-elevated inflation and a changed geopolitical environment as reasons the Fed shifted from holding rates in July to raising them now. "It's hard to describe current financial conditions as restrictive; this time we removed some of the accommodation," he said, leaving the door open to further increases.
Oil prices turned lower, helped by reports that Saudi Arabia is exploring alternative crude supply routes. Brent crude futures for November delivery settled at $105.83 a barrel on London's ICE Futures Exchange, down 2.69% from the previous session. West Texas Intermediate futures for October delivery fell 3.21% to $102.43 a barrel on the New York Mercantile Exchange.
Reuters, citing sources, reported that Saudi state oil company Aramco had offered long-term Asian contract buyers additional crude transfers at sea near the Omani port of Sohar. The move partly eased concerns following an attack on Saudi Arabia's East-West pipeline, a key transport route near the Red Sea. Crude and refined product inventories for last week, compiled by the U.S. Energy Information Administration and others, also fell less than the market had expected. Stockpiles of refined products such as gasoline and diesel proved resilient.
