How stocks are faring Thursday after federal interest rate hike

U.S. stocks climbed on the morning of Sept. 17 in the wake of a sell-off sparked by the Federal Reserve’s decision to hike interest rates.

In an effort to combat stubborn inflation, the Federal Reserve announced a 0.25% interest rate hike on Wednesday, Sept. 16, raising its benchmark interest rate into the 3.75% to 4% range. This is the central bank’s first rate hike since July 2023.

The increase is an attempt to address inflation, which has remained above the Fed’s 2% target for more than five years and worsened since the start of the war in the Middle East.

“The plain fact is that inflation is too high, and has been for too long,” said Fed Chairman Kevin Warsh during a press conference following the announcement.

“The committee’s unanimous vote shows our resolve to achieve price stability on a timelier basis. We aim to ensure that credit and financial conditions are consistent,” Warsh said.

U.S. stocks whipsawed lower on Wednesday in the wake of the Federal Reserve’s announcement, NorthJersey.com reported. Prior to the announcement, the three major US stock indexes had been gaining ground.

The Dow Jones shed more than 600 points, ending the day down 1.2%, USA TODAY reported. The S&P 500 lost 0.4% by the close of the market and the tech-heavy Nasdaq remained flat.

Historically, according to Investopedia, stocks often decline in the months following a rate hike but tend to recover over time.

“During the six tightening cycles since 1994, stocks generally struggled during the first several months following the initial rate increase. On average, returns were negative through the first four months before improving significantly by five to six weeks after the initial hike,” LPL Financial Chief Equity Strategist Jeff Buchbinder wrote. “Importantly, those early challenges have not typically translated into longer-term losses.”

Here’s the latest as of the morning of Sept. 17.

How is the market faring Sept. 17?

Stocks opened higher in the wake of the rate hike, with the three major averages rising on Thursday morning.

The Dow Jones climbed 410 points, or 0.8%, just after the opening bell, CNBC’s Sean Conlon reported. The S&P 500 gained 1.2%, and the Nasdaq jumped 1.5%

According to CNBC, this climb was supported by a drop in Treasury yields and oil prices, as well as gains in key technology stocks as traders try to claw back some of Wednesday’s losses.

This article originally appeared on NorthJersey.com: How stocks are faring Thursday after federal interest rate hike