Stocks plunge after Fed hikes rate for first time in three years

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeInvestorStocks plunge after Fed hikes rate for first time in three yearsMarkets spooked by projections that signal growing support for further tighteningLast updated 15 minutes ago Stocks plunged and yields on short-dated United States Treasuries rose after the Federal Reserve lifted interest rates. Photo by Michael M. Santiago/Getty ImagesStocks fell toward the lowest since July as the Federal Reserve signalled the possibility of further policy tightening after raising interest rates for the first time since 2023 to fight inflation.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountEquities erased gains, with the S&P 500 dropping 1 per cent. The Dow Jones Industrial Average lost 1.7 per cent. Short-dated Treasuries underperformed, with two-year yields hitting the highest since 2024. The dollar climbed. Money markets priced in an about 50 per cent chance of a Fed hike in October.The Federal Open Market Committee voted unanimously to increase the benchmark rate to a range of 3.75 per cent to 4 per cent. The so-called dot plot, which the United States central bank uses to signal its outlook for the path of monetary policy, suggests one more hike this year.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againIn his remarks to reporters, Fed Chair Kevin Warsh restated his concerns over inflation, saying too many categories of products and services were showing annualized price gains above 3 per cent on a 6- and 12-month basis.“The debate now shifts from whether rates will rise again to how many hikes lie ahead,” said Seema Shah at Principal Asset Management. “The unanimous vote shows that rising energy prices and stubborn inflation have brought even the doves on board, making a one-and-done move highly unlikely.”With markets already pricing multiple increases, policymakers will probably need to deliver at least one more hike to safeguard credibility, she added.The history is clear that once the Fed begins raising rates, they do it multiple times, but the pattern is less clear about whether they will raise rates at consecutive meetings or leave rates unchanged at some of the meetings in between this meeting and future ones where they do raise rates, according to Chris Zaccarelli at Northlight Asset Management.“Chairman Warsh and the rest of the committee are building a strong reputation through their laser focus on defeating inflation,” said Jeff Roach at LPL Financial. “Given the current economic circumstances, the committee delivered what was needed. Going forward, the inflation debate will likely center on the magnitude of improvement as geopolitical conflicts wane.”Wednesday’s rate decision sends a message to the markets that the Fed isn’t just talking about inflation, it’s actually doing something about it, according to Alex Guiliano at Resonate Wealth Partners.“While one 25-basis point hike isn’t likely to bring inflation down overnight, it could help to stabilize the bond market, which has a direct impact on borrowing costs,” he said.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.