Wall Street's major indexes turned in their worst "Fed Day" performance since December 2024 after the Federal Reserve held interest rates steady and three officials voted for a hike. The S&P 500 lost 1.52% to 7,316, while a re-escalation of U.S.-Iran tensions and the jump in oil prices that followed added to the pressure on equities.
Wall Street endured a painful selloff on Wednesday as new Federal Reserve Chair Kevin Warsh presided over one of the wildest Fed decision days for markets in recent memory. Major equity indexes put in their worst "Fed Day" performance since December 2024, while the yield on the 30-year bond shot higher.
The Dow Jones Industrial Average fell 2.19% to 51,594. The S&P 500 lost 1.52% to 7,316 and the Nasdaq Composite dropped 1.74% to 24,443.
Three officials voted for a hike
The Fed held interest rates steady, as had been expected, but stocks fell as traders digested the news that three officials had voted for a rate hike. Renewed U.S.-Iran tensions and the subsequent jump in oil prices compounded the selling.
Energy and consumer defensive stocks were among the few gainers, while industrials fell 3.42% and technology stocks dropped 2.36%. Caterpillar tumbled 6.91% after an analyst downgrade, and Deere & Co dropped 4.52% amid falling agricultural commodity prices and cautious guidance.
Kospi slide pulls the Nasdaq 100 into correction
Semiconductor stocks felt the strain as the South Korean Kospi Index dropped 6%, pulling the Nasdaq 100 — down 10% from its June high — into correction territory. Micron Technology and Sandisk both tumbled as AI jitters spread.
News from Berkshire Hathaway offered another reason for caution. Berkshire Hathaway reached a record cash position of $397 billion, a war chest that has fuelled speculation the firm Warren Buffett transformed may be readying for a downturn.
Meta and Microsoft diverge after the bell
Both companies reported after the bell. Meta Platforms shares tumbled almost 10% after it posted earnings per share of $6.18, missing analysts' estimates by $1.04 per share, according to LSEG. Microsoft rose about 3% on quarterly revenue of $90.01 billion, topping estimates of $87.62 billion.
The dollar finished 0.5% lower and more than erasing all of its gains from earlier in the month.
Sources: MarketWatch (snippet-based), The Motley Fool, CNBC
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