Fed hikes a quarter point, but Warsh's press conference sinks the Dow 1.2%

The first rate rise since July 2023 lifts the target range to 3.75%-4.00%, yet Chair Warsh calling money still too cheap sent the Dow down 630 points and the 10-year yield above 5% for the first time since 2007.

Deepakshi

Kristal Research & Marketing team

17 Sept

Key takeaways — AI summary

The Federal Reserve raised rates by 0.25 points in a unanimous 12-0 vote to a 3.75%-4.00% range, its first hike since July 2023; markets shrugged until Chair Kevin Warsh said the move removed only "a dose of accommodation" and that inflation risks skew to the upside.
The Dow shed 630 points from that moment to close down 1.21% at 51,463, the S&P 500 fell 0.40% to 7,555, while the Nasdaq 100 was flat at 28,945; Energy dropped 2.97% and Financials 1.60%, with Goldman, Wells Fargo, BofA and Citi posting their worst session since February.
The 10-year Treasury yield reclaimed 5.00% and settled at 5.012%, a first close above 5% since 2007, and the 2-year jumped 5.2bps to 4.723%, while long-end yields eased; the dollar hit its strongest since July 31, with the euro below 1.15 and yen past 156.
Data supported Warsh: retail sales rose 1.2% (0.8% expected), the core measure 1.4% (0.4% expected), and prices on Chinese goods jumped 1.0%, the biggest since 2004; homebuilder confidence fell to 32 and 30-year mortgage rates reached 6.97%.
Crude settled at $102.43, down 3.2% on peace signals; AI-linked names diverged sharply, with optical and networking stocks such as Lumentum (+10%) rising while J.B. Hunt (-13.2%) warned on diesel costs and crypto names fell after the Senate stalled the Clarity Act.

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