The Federal Reserve raised the benchmark interest rate by 25 basis points to a range of 3.75%-4.00% on September 16. The decision was unanimous, with a 12-0 vote from the Federal Open Market Committee, marking the start of a new tightening cycle.
Following the announcement, the S&P 500 index declined by 0.45% to 7,551.81 points. The Dow Jones Industrial Average experienced an initial drop of 631 points before partially recovering by the close of the trading session.
Financial stocks faced significant pressure, with Bank of America and Wells Fargo shares falling by approximately 3% each. Goldman Sachs and American Express saw steeper declines, dropping by about 4% each.
In contrast, the cybersecurity sector showed resilience. CrowdStrike recorded unusual options activity as investors shifted capital into the sector, citing concerns over AI-related security threats.
The 10-year Treasury yield is approaching the 5% threshold, creating competition for capital against equities. The Federal Reserve's projections suggest at least one additional rate hike before the end of the year.
