US stocks fell in volatile trading Wednesday afternoon as the Federal Reserve made another outrageous rate hike in its battle against persistent inflation.
The US central bank has raised its key rate by 0.75% for the third consecutive time, pushing the federal funds rate to a new range of 3.0% to 3.25% – the highest level since 2008 – from a current range between 2.25% and 2.5%.
The benchmark S&P 500 fell 0.8%, while the Dow Jones Industrial Average lost 250 points. The tech-heavy Nasdaq Composite lost 0.7%. Meanwhile, the CBOE Volatility Index (^VIX) – Wall Street’s “fear” gauge – briefly peaked above 30 for the first time since July 1.
“Restoring price stability is essential to paving the way for maximum employment and longer-term price stability,” Fed Chairman Powell said in his speech after the meeting. “We will continue until we are sure the job is done.”
In the wake of the policy announcements, bond market activity has been at the center of attention. Treasury yields continued their perilous climb on Wednesday, with the yield-sensitive 2-year Treasury bond crossing 4.1% – the highest level since 2007. The US 10-year benchmark held above 3.5%, its highest level since 2011. .
“You can only steer the ship toward the storm for so long, but eventually there comes a time when you have to close the shutters and with the Fed’s third consecutive 75 basis point rate hike in the past four months, market participants should be watching. for cover to weather the storm ahead,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said in a note. “Overall, current policy actions largely reflect the economic backdrop and to slow the economy clearly requires the Fed to be aggressive.”
Among the market movers on Wednesday was General Mills (GIS), which rose nearly 6% after the company reported better-than-expected quarterly results and raised its full-year sales outlook as it benefits from higher prices for breakfast cereals, snack bars and pet foods.
Beyond Meat (BYND) stocks gave up an earlier gain after announcing a partnership with Taco Bell (YUM) for their first menu collaboration: Beyond Carne Asada Steak. The news came after the meat substitute producer suspended Chief Operating Officer Doug Ramsey over his arrest for allegedly biting a man in the nose during a traffic accident over the weekend.
Stitch Fix (SFIX) shares rebounded, rising nearly 8% after the company reported disappointing fourth-quarter revenue expectations and sales guidance and reported a decline in active customer base.
Across the Atlantic, Russian President Vladimir Putin announced a “partial mobilization” of Ukraine and vowed to annex the occupied territories. In a televised report, he called the steps “urgent, necessary steps to defend Russia’s sovereignty, security and territorial integrity”.
The threat of an escalation in Russia’s war against Ukraine sent markets on edge. Oil prices rose, with West Texas Intermediate (WTI) crude prices rising 2.5% to $86.07 a barrel and Brent crude rising 2.4% to $92.81 a barrel. The dollar rose to a new record high as the euro slid. In crypto markets, bitcoin (BTC-USD) fell back below $19,000.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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