Fed Meeting Live | Dow Jones Live| US Stock Market Highlights: Dow ends 650 pts lower after Fed rate hike, more rate tightening seen

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Business News›Markets›US Stocks›Wall St Guide›Fed Meeting Live | Dow Jones Live| US Stock Market Highlights: Dow ends 650 pts lower after Fed rate hike, more rate tightening seen LIVE BLOG US stocks end lower after Fed rate hike; Dow falls over 600 points. Synopsis Fed Meeting Live Updates | US Stock Market Highlights: US stocks ended lower on Wednesday after the Federal Reserve raised interest rates for the first time in more than three years as inflation remained elevated. The Dow fell over 600 points, while easing oil prices offered some relief. Chip stocks gained, but energy shares declined. US stocks ended lower after the Federal Reserve raised interest rates for the first time in more than three years, citing persistent inflation pressures. Show more 1 New Update U.S. stocks whipsawed lower on Wednesday after the Federal Reserve raised its key interest rate for the first time in over three years to fight stubbornly high inflation stemming from soaring crude oil prices during the US-Israeli war on Iran. Read more The strengthening of US economy and geopolitics pushing inflation higher were key reasons for the Federal Reserve to raise interest rates, its chair Kevin Warsh said on Wednesday. Reiterating his commitment not to give forward guidance on the rate path, he pointed to trends in the economic data to deliver the Fed's stated objective of price stability. Read more - Matthias Scheiber, head of the multi-asset team at Allspring Global Investments, London - Steve Sosnick, chief strategist at Interactive Brokers, New Canaan, Connecticut - Short-dated U.S. Treasury yields pushed higher on Wednesday after the Federal Reserve unanimously raised interest rates and signaled more hikes ahead to tackle inflation. The policy-sensitive two-year yield climbed to 4.738% during Fed Chair Kevin Warsh's remarks, reaching its highest level since July 2024. - Updated policy projections revealed that 16 of 18 Fed officials expect at least one more rate increase before the end of the year. Following the central bank's announcement, market expectations for another rate hike at the Fed's late October meeting rose to 56.5%. Gold prices dropped more than 1% on Wednesday after the Federal Reserve raised interest rates and signaled further borrowing cost increases ahead. Spot gold fell to $4,240.10 per ounce as the decision boosted the U.S. dollar, making the non-yielding metal more expensive for foreign buyers and dampening its short-term appeal. Fed Chair Kevin Warsh cited persistent inflation from tariffs, energy shocks, and heavy spending as the main driver for the quarter-point hike to a range of 3.75% to 4.00%. Market analysts noted that Warsh's hawkish tone on restoring price stability reinforces expectations for additional rate increases, putting pressure on gold and other precious metals. - Federal Reserve Chairman Kevin Warsh stated on Wednesday that the central bank can bring down inflation without causing damage to the labor market. Speaking after policymakers raised borrowing costs, he noted that current unemployment levels align with full employment, making job market harm unnecessary to reach inflation goals. - Warsh added that restoring price stability is essential for supporting long-term, sustainable economic growth. By keeping inflation under control, the central bank aims to extend current economic expansion without sacrificing employment. - Federal Reserve Chairman Kevin Warsh admitted on Wednesday that measuring the true impact of monetary policy is no easy task. During a press conference following the Fed meeting, Warsh noted that neither he nor his colleagues were comfortable describing current financial conditions as strictly restrictive. - To address this, Warsh explained that the Fed's latest rate hike was designed to pull back economic stimulus. By removing a dose of accommodation, the central bank aims to align credit conditions more closely with its long-term goals for the economy. - Michael Gapen, chief US economist, Morgan Stanley, New York Major US indexes turned lower as Warsh's comments came to an end. The Dow Jones Industrial Average fell 625.04 points, or 1.20%, to 51,468.07, the S&P 500 declined 42.28 points, or 0.56%, to 7,543.45 and the Nasdaq Composite dropped 46.07 points, or 0.18%, to 25,935.50. - Federal Reserve Chairman Kevin Warsh dismissed concerns on Wednesday that rising bond yields signal a loss of confidence in the central bank. Speaking after the Fed's latest policy meeting, he clarified that the recent climb in real-world borrowing costs is being driven by fundamental economic forces instead. - Warsh pointed to strong economic growth, heavy corporate spending that has heightened competition for capital, and broader geopolitical factors as the primary drivers behind higher yields. U.S. Treasury yields continued to climb as Federal Reserve Chair Kevin Warsh spoke on Wednesday. The yield on the benchmark 10-year Treasury note reversed earlier declines to turn higher, rising 0.6 basis points to trade at 5.002%. - Goldman Sachs expects its fixed-income, currencies, and commodities trading business to be slightly softer in the third quarter compared to its equities franchise. CEO David Solomon shared the outlook at a financial conference, pointing out that equities continue to perform very strongly on a relative basis. - Solomon noted that the quarter is not over yet, with a few weeks remaining in September. While trading in fixed income and commodities has moderated, the overall business maintains solid momentum backed by equity market strength. - Federal Reserve Chairman Kevin Warsh stated on Wednesday that the central bank's main priority remains controlling price growth following its latest rate increase. He warned that inflation has stayed too high for too long, noting that recent summer data shows no real progress toward price stability. - Speaking at a news conference, Warsh emphasized that underlying inflation trends have not meaningfully improved despite previous efforts. The central bank will keep its primary focus on fulfilling its price stability mandate until inflation shows clear signs of cooling. - Credit cards: Interest rates will rise quickly, adding roughly $2 billion in extra interest costs for consumers over the next year. It is best to pay down balances, request lower rates, or consider a 0% balance transfer card. - Mortgages: Fixed-rate mortgages remain unaffected, but adjustable-rate borrowers should prepare for higher monthly payments. Rates on new home loans track 10-year Treasury yields, which are already elevated due to high national debt and economic worries. - Bonds: Older bond prices drop when rates rise, but new bonds offer better returns. Investors can build a bond ladder by purchasing bonds that mature at different times to lock in higher rates predictably. - Savings: Short-term rates benefit high-yield savings accounts, CDs, and money market funds. Traditional bank savings rates remain low, so shopping around for high-yield accounts paying around 4% is essential. The Federal Reserve unanimously voted to raise interest rates on Wednesday, marking the first major policy shift under new Fed Chair Kevin Warsh. Policy projections show that 16 out of 18 Fed officials expect at least one more quarter-point rate increase before the end of the year, pushing the target policy rate into the 4.00% to 4.25% range to combat stubborn inflation. Financial markets reacted quickly as Warsh emphasized the central bank's commitment to restoring price stability. U.S. stock gains narrowed during his remarks, while short-term 2-year Treasury yields turned higher and rose to 4.71% as investors priced in tighter monetary policy through next year. - The Federal Reserve raised its benchmark interest rate by a quarter point to a range of 3.75% to 4.00% on Wednesday. Fed Chair Kevin Warsh cited persistent inflation, which reached 3.4% in August, as the main driver for the central bank's first rate increase since summer 2023. - Borrowers face higher costs as variable credit card rates are expected to rise within a month or two. Auto loan rates and adjustable mortgages will also grow more expensive, though many homeowners remain protected by low fixed mortgage rates secured during the pandemic. - Home buyers face additional headwinds as 30-year fixed mortgage rates track surging 10-year Treasury yields rather than the Fed rate directly. Surging yields pushed mortgage rates to 6.76% last week, causing existing home sales to slow for three consecutive months. - Savers stand to benefit from the policy shift as online and traditional banks typically adjust their deposit rates higher following Fed actions. Yields on high-yield savings accounts and certificates of deposit are expected to climb, offering better returns for cash reserves. - Ryan Detrick, chief market strategist at Carson Group in Omaha The US Federal Reserve raised interest rates on Wednesday for the first time since 2023, moving to contain inflation that has stayed well above its long-term target. The Federal Open Market Committee announced the decision after a two-day meeting, lifting the benchmark interest rate by 25 basis points to a range of 3.75%-4.00%. Read more - Soaring diesel prices are driving shippers to move freight from trucks to rail to lower their transportation costs. Speaking at an industry conference, Union Pacific executives noted that customers are increasingly leveraging rail's superior fuel efficiency, boosting volume growth alongside a broader recovery in freight demand. - Despite paying $5.25 to $5.30 per gallon for fuel, well above its third-quarter forecast, Union Pacific reports that its underlying business remains strong. The railroad sees solid growth in industrial and intermodal shipments, with executives reporting healthy order books and no signs of a slowdown. - The U.S. Treasury's Financial Crimes Enforcement Network met with international financial institutions on Wednesday to advance Operation Economic Outcast, an initiative aimed at cutting off Tehran's funding for Middle East conflicts. - By gathering global banks, the Treasury provided essential information to help these institutions target and shut down revenue streams and procurement networks linked to the Iranian regime. Anthropic is combining Claude Cowork and Claude Chat into a unified experience simply called Claude. The merge will roll out to Pro and Max subscribers over the next few weeks, with availability expanding to additional subscription tiers shortly after. Alongside the platform unification, Anthropic is launching Claude Docs and Claude Slides while integrating Claude Design directly into user conversations. All three features are currently available in beta for paid account holders. Crypto giant Tether provided roughly $1.5 billion in gold-backed financing to top US dealer Gold.com Inc., according to the dealer's annual filings. Powered by profits from its USDT stablecoin, Tether built up a massive 146-ton bullion reserve worth around $20 billion, putting it on par with major central banks. The arrangement lets Tether put its vast precious metal reserves to work while giving Gold.com access to lower-cost inventory financing compared to traditional bank loans. Tether also acquired a 13% stake in Gold.com for $150 million, further expanding its physical footprint in the global gold market. - Private equity firm Valor Equity Partners distributed around $8.5 billion in SpaceX stock directly to its limited partners. Run by long-time Elon Musk ally Antonio Gracias, Valor opted for an in-kind share transfer rather than a cash sale, allowing investors to cash in on major gains tax-efficiently without flooding the market with shares. - The distribution represents 8.5% of Valor's total stake in SpaceX, which it has backed for nearly two decades. Following the firm's historic investment return, Valor still holds a 3.4% stake in the rocket company valued at nearly $92 billion. Consumers may be griping about higher prices at the pump and elsewhere, but they keep spending, helping to power the economy, according to the latest government snapshot. Retail sales rebounded at a better-than-expected 1.2% increase last month after recording a revised 0.5% dip in July, according to Commerce Department data released Wednesday. Economists were anticipating a 0.7% gain for the month, according to FactSet. The decline in July was notable because there had been few signs of fatigue from U.S. consumers. Americans spent heavily during the World Cup and Amazon Prime Day sales this summer. That followed solid retail sales in April and May as Americans dipped into their government tax refunds. The Canadian computer scientist considered one of the founders of AI, Yoshua Bengio, told AFP that humanity is "losing control" of the technology and the world needs guardrails similar to nuclear arms controls. Fears about the dangers of AI have intensified in recent weeks, as workers from major companies have resigned with warnings about potentially existential threats to human life if the pace of technological advancement is not checked. Bengio is a University of Montreal professor who won the 2018 Turing Prize, computing's Nobel, alongside Geoffrey Hinton, widely known as the "godfather of AI." For Bengio, "there's a reason that companies are saying this is going too fast, that we're losing control." - Spot gold jumped 1.4% to $4,350.48 per ounce on Wednesday as oil prices fell and U.S. Treasury yields pulled back. Investors snapped up the precious metal while awaiting the U.S. Federal Reserve's upcoming policy announcement and remarks from Chair Kevin Warsh. - Markets are pricing in a 93% chance of a 25-basis-point rate hike following energy-driven inflation fears from the ongoing conflict in the Middle East. Lower Treasury yields provided immediate relief for gold, while traders weigh whether potential steps to tame inflation will support its long-term appeal. - UN Secretary-General Antonio Guterres warned world leaders on Wednesday that rapidly advancing artificial intelligence poses serious risks that require stronger global oversight. His stance puts him directly at odds with President Donald Trump, who recently argued that existing safeguards are sufficient and that heavy regulation could hand a competitive advantage to China. - Speaking ahead of the UN General Assembly in New York, Guterres stressed that governments have a primary duty to protect their citizens from emerging AI threats. He cautioned that an unbridled race to develop the technology without proper guardrails could trigger a global disaster, calling for international cooperation and shared standards to ensure safe development. - The clash comes amid growing public and industry alarm over AI safety, highlighted by the recent resignation of an Anthropic researcher who warned of existential dangers. To address these concerns, Guterres is pushing for global governance, with potential UN Security Council discussions and bilateral US-China risk management talks on the agenda for the coming week. Elon Musk’s Tesla and SpaceX have filed a lawsuit in an Austin, Texas federal court against nanotechnology firm TERA-print to secure the rights to the name Terafab for their planned $16.8 billion Texas chip factory. The legal action comes after TERA-print sent a cease-and-desist letter threatening to sue for trademark infringement, arguing that Tesla’s May trademark applications for Terafab would confuse customers familiar with its own desktop photolithography printer, the Tera-Fab. Musk’s companies are asking the court to declare that their factory which will produce advanced processors for Optimus robots, Cybercabs, and SpaceX data centers does not violate TERA-print’s trademark, stating that no reasonable consumer would confuse a massive semiconductor plant with a niche bioengineering desktop tool. - Gerry Sparrow, chief investment officer at Sparrow Capital Management Shares of J.B. Hunt Transport Services dropped 11% on Wednesday after the trucking firm's finance chief warned of a sequential drop of 5% to 10% in third-quarter profit. Read more Cryptocurrency markets faced renewed downward pressure on Wednesday as sentiment was hit by the U.S. Senate's failure to advance the CLARITY Act, a pivotal market structure bill intended to establish a comprehensive regulatory framework for digital assets. The legislative defeat prompted frustration among industry leaders, with Coinbase CEO Brian Armstrong posting on X that while the outcome was disappointing, the sector "can't wait on Congress anymore" and calling on the SEC and CFTC to use their existing authorities to establish clear rules. Market anxiety has been further exacerbated by $540 million in liquidated bullish positions and $450 million in daily spot Bitcoin ETF withdrawals, while investors bracing for an expected Federal Reserve rate hike continue to scale back risk exposure. The market rally in AI-related stocks is facing mounting political risks ahead of the U.S. midterm elections, as bipartisan calls for safety guardrails and widespread public pushback against data center construction weigh on investor sentiment. A recent pullback across semiconductor stocks has highlighted market fragility following commitments from major AI developers to pace their advanced model rollouts. While President Donald Trump continues to dismiss AI safety warnings as unnecessary and destructive to U.S. competitiveness, growing momentum behind Democratic proposals for stricter oversight has led Wall Street strategists to warn that political shifts in Congress could trigger further sector selloffs and complicate long-term capital expenditure expectations. - Jim Baird at Plante Moran Financial Advisors Ron Baron's latest portfolio shows a strong bet on long-term growth companies, with SpaceX, Tesla, MSCI, Arch Capital and Gartner forming the top five holdings. The portfolio is heavily tilted towards businesses linked to space, electric vehicles, financial market infrastructure, insurance and data-led services. According to reports, the overall portfolio value via Baron Funds is around $66 billion. Read more Robert Kiyosaki, author of Rich Dad Poor Dad, has warned of what he described as the “BIGGEST CRASH IN HISTORY”, claiming that a major stock and bond market downturn has already begun and could spread across the world. Read more Morgan Stanley Investment Management has raised $1.3 billion in capital commitments for its oversubscribed North Haven Growth & Innovation fund, which targets high-growth private tech companies. The asset manager alongside its affiliates and employees provided 24% of the capital for the fund, which supports both primary and secondary investments and has already backed prominent startups such as Databricks, Anduril Industries, and Ramp. The fundraise reflects Morgan Stanley's strategy to deepen ties with promising firms across their entire corporate lifecycle, capturing venture deals, strategic advisory roles, and eventual initial public offerings. South Korean memory chipmaker SK Hynix stated that no final decisions have been made regarding a reported manufacturing partnership with Intel Corp. in the United States. Responding to media reports suggesting the company might lease space at Intel's upcoming Ohio facility or form a joint venture with cloud computing leaders, SK Hynix clarified that while it continues to evaluate options to strengthen its global competitiveness, no specific agreements are currently finalized. The potential collaboration comes as U.S. officials urge overseas chipmakers to expand domestic memory production, driving temporary share price gains for both semiconductor companies following the news. U.S. retail sales surged 1.2% in August to post their largest gain in five months, comfortably topping economic forecasts and highlighting broad-based consumer resilience despite rising gas prices. According to Census Bureau data released Wednesday, twelve of thirteen retail categories advanced, powered by strong back-to-school demand, a 2.6% bounce in online shopping, and higher receipts at gas stations and restaurants. The robust figures, along with a 1.4% jump in core control-group sales used to calculate gross domestic product, signal that steady job growth and stock gains continue to fuel household outlays even as sticky energy inflation weighs on real wages and keeps pressure on the Federal Reserve. Amazon announced on Wednesday that it is increasing minimum hourly pay for eligible full-time U.S. operations staff by $1, bringing base wages to $20 per hour. Along with the pay bump, the e-commerce giant introduced a banking perk called Day 1 Financial in partnership with First Tech Federal Credit Union, offering employees low-cost financial services. The company noted that when factoring in broader benefits like low-cost health coverage, prepaid education, and free Prime memberships, total average compensation for its core frontline workforce will now top $32 per hour. Apple is reportedly considering using Nvidia's NVLink Fusion networking technology to connect its upcoming M8 Ultra processors in a proposed enterprise AI inference server, according to a report from The Information. The initiative could mark the iPhone maker's return to dedicated server hardware for the first time since retiring its Xserve line in 2011, providing high-performance computing systems for businesses, developers, and governments. While the hardware is not expected to launch until at least 2029 and plans could still change, news of the potential collaboration lifted Apple's shares in premarket trading despite the historically tense relation between the two tech giants. The major U.S. stock indexes opened higher following a two-day slide, as lower oil prices offered some relief during a tense wait for the Federal Reserve's interest rate decision on Wednesday. Read more U.S. retail sales surged by 1.2 percent in August to reach $773.9 billion, rebounding sharply from July and topping economist projections of 0.8 percent growth. Government data released Wednesday shows that high energy costs played a major role in driving up nominal spending, with gasoline station sales jumping 3.1 percent month-over-month as national gas prices hovered above $4 a gallon due to ongoing Middle East conflict. Even after stripping out volatile fuel expenditures, consumer spending remained resilient across broader retail sectors, including notable gains at restaurants and bars. Investors will also watch August retail sales data from the US Commerce Department for clues about consumer demand. Retail sales fell 0.6% in July, marking the biggest decline in more than a year and surprising economists. Analysts surveyed by FactSet expect sales to rebound 0.9% in August, adding another key data point for markets ahead of the Fed decision. Rising Treasury yields have added another source of pressure for equities. The 10-year Treasury yield stood at around 5% on Wednesday after briefly touching 5.04% earlier this week, its highest level in years. Higher yields have been driven by concerns over inflation, the energy crisis linked to the Iran war and growing US government debt. Oil prices declined for the first time this week, with Brent crude falling 1.1% to $107.61 a barrel and US crude dropping 2% to $103.70. Prices remain far above the roughly $70 level seen before the US and Israel attacked Iran in late February. Supply disruptions and attacks on key shipping routes continue to weigh on markets. Persistent inflation has strengthened expectations for tighter monetary policy. Recent US data showed prices remain above the Fed’s 2% target, while Fed Chair Kevin Warsh has warned that inflation remains elevated. Higher interest rates can increase borrowing costs and reduce demand, making the upcoming policy decision particularly important for investors. US stock futures rose on Wednesday as investors positioned themselves ahead of the Federal Reserve’s interest-rate decision. S&P 500 futures gained 0.2%, while Dow Jones Industrial Average futures rose 0.1% and Nasdaq 100 futures climbed 0.4%. Markets are widely expecting the central bank to raise rates, which would mark its first hike in more than three years.