The Federal Reserve's dismal forecast caused the Dow to plummet on Wednesday. The blue-chip index's losing run reached 10 days in the process, the longest during Gerald Ford's presidency.
The Fed said in a policy statement that it is only projecting two interest rate cuts in 2025, rather than the four that were previously anticipated, which caused the Dow Jones Industrial Average to close the day down around 1,123 points, or 2.6%. Unlike its earlier projection, the Fed now expects inflation to stay persistently above its target range for a longer period of time.
Read Also: Worried About a Stock Market Crash? Learn How to Protect Your Money Before the Next Downturn!
For the first time since September 20–October 4, 1974, when the index dropped for 11 consecutive sessions, the Dow has experienced a 10-day losing run.
The Dow had declined prior to Wednesday's sharp decline because the overall markets were still robust. In its lengthy losing streak, the Dow has lost less than 6%, which is a minor setback. Prior to a steep decline on Wednesday, several indices were at or close to record highs. The Nasdaq Composite index dropped 3.6%, while the S&P 500 sank 3%.
The Fed lowered interest rates by a quarter point on Wednesday, as investors had anticipated. However, the Fed's announcement that it only anticipates two rate cuts in 2025 sent a shockwave through the markets, indicating that monetary conditions will continue to be tight. The Fed's "hawkish cut" caused stocks and bonds to fall, according to Infrastructure Capital Advisors CEO and CIO Jay Hatfield.
Investors priced in a 98% likelihood of a rate decrease by the Fed at its January meeting on Tuesday. However, Fed funds futures data showed that traders priced in a mere 6% possibility that the central bank will cut rates at next month's meeting following Fed Chair Jerome Powell's news conference on Wednesday.
Chris Zaccarelli, CIO of Northlight Asset Management, stated that the market was not impressed by the probable future trajectory of interest rates.
The 15% drop in UnitedHealth Group this month has caused the Dow to drop. Following the shooting death of UnitedHealthcare CEO Brian Thompson, the insurance behemoth started to sell off. Ironically, on Wednesday, UnitedHealth was up around 3.3%.
Read Also: Is DJT stock in freefall? Trump Media is crashing again. Here’s why.
The 30-stock index has also declined due to Nvidia, a US chipmaker that entered the Dow in November. Even though Nvidia's stock has risen more than 180% this year, it has dropped almost 5% in the last month, which has contributed to the Dow's loss.
The Dow is still up 14% this year and up more than 5,000 points in 2024 despite the lengthy decline.
Following the election results, markets first jumped as investors were relieved that judicial battles and recounts would not be necessary. Trump's pledges to reduce taxes and red tape have also generated a lot of excitement.
This tale is still in progress and will be updated.
Is there trading in the US stock market today?
The NYSE is open from 9:30 a.m. to 4:00 p.m. Eastern time, Monday through Friday.
Must Read: How do you detect pump-and-dump stocks?
What is the current state of the US market?
S&P 500 -20.61 (-0.34%) 6,053.47
What is happening in US stock market?
| Index |
Last |
Change |
| trading lower Dow Jones Industrial Average .DJI |
43,449.90 |
-267.58 |
| trading lower Nasdaq Composite Index .IXIC |
20,109.06 |
-64.83 |
| trading lower S&P 500 Index .SPX |
6,050.61 |
-23.47 |
Mercado Wolski
The Federal Reserve's dismal forecast caused the Dow to plummet on Wednesday. The blue-chip index's losing run reached 10 days in the process, the longest during Gerald Ford's presidency.
The Fed said in a policy statement that it is only projecting two interest rate cuts in 2025, rather than the four that were previously anticipated, which caused the Dow Jones Industrial Average to close the day down around 1,123 points, or 2.6%. Unlike its earlier projection, the Fed now expects inflation to stay persistently above its target range for a longer period of time.
Read Also: Worried About a Stock Market Crash? Learn How to Protect Your Money Before the Next Downturn!
For the first time since September 20–October 4, 1974, when the index dropped for 11 consecutive sessions, the Dow has experienced a 10-day losing run.
The Dow had declined prior to Wednesday's sharp decline because the overall markets were still robust. In its lengthy losing streak, the Dow has lost less than 6%, which is a minor setback. Prior to a steep decline on Wednesday, several indices were at or close to record highs. The Nasdaq Composite index dropped 3.6%, while the S&P 500 sank 3%.
The Fed lowered interest rates by a quarter point on Wednesday, as investors had anticipated. However, the Fed's announcement that it only anticipates two rate cuts in 2025 sent a shockwave through the markets, indicating that monetary conditions will continue to be tight. The Fed's "hawkish cut" caused stocks and bonds to fall, according to Infrastructure Capital Advisors CEO and CIO Jay Hatfield.
Investors priced in a 98% likelihood of a rate decrease by the Fed at its January meeting on Tuesday. However, Fed funds futures data showed that traders priced in a mere 6% possibility that the central bank will cut rates at next month's meeting following Fed Chair Jerome Powell's news conference on Wednesday.
Chris Zaccarelli, CIO of Northlight Asset Management, stated that the market was not impressed by the probable future trajectory of interest rates.
The 15% drop in UnitedHealth Group this month has caused the Dow to drop. Following the shooting death of UnitedHealthcare CEO Brian Thompson, the insurance behemoth started to sell off. Ironically, on Wednesday, UnitedHealth was up around 3.3%.
Read Also: Is DJT stock in freefall? Trump Media is crashing again. Here’s why.
The 30-stock index has also declined due to Nvidia, a US chipmaker that entered the Dow in November. Even though Nvidia's stock has risen more than 180% this year, it has dropped almost 5% in the last month, which has contributed to the Dow's loss.
The Dow is still up 14% this year and up more than 5,000 points in 2024 despite the lengthy decline.
Following the election results, markets first jumped as investors were relieved that judicial battles and recounts would not be necessary. Trump's pledges to reduce taxes and red tape have also generated a lot of excitement.
This tale is still in progress and will be updated.
Is there trading in the US stock market today?
The NYSE is open from 9:30 a.m. to 4:00 p.m. Eastern time, Monday through Friday.
Must Read: How do you detect pump-and-dump stocks?
What is the current state of the US market?
S&P 500 -20.61 (-0.34%) 6,053.47
What is happening in US stock market?