Stock markets lost their momentum since the Fed has left the interest rate unchanged. The Fed’s chairman Jerome Powell’s says he expects interest rates to stand at current level after raising it four times last years.
Investors, on the other hand, was expecting fed to cut the rate. Donald Trump’s comments over the one percentage point cut in an interest rate and bonds buying had added to trader’s sentiments.
U.S. stocks fell for the two consecutive days while Treasury yields jumped following the Federal Reserve’s latest rate policy. The drop in oil prices and energy sector has also been weighing on broader the market index.
“Many investors had thought that the Fed might cut rates again this year, and that was built into some of the expectations,” said Kate Warne, an investment strategist at Edward Jones. “The Fed’s commentary that inflation was transitory really conveyed that the Fed wasn’t seeing a need to cut rates in response to lower inflation. That’s part of why we saw the sell-off.”
Oil price plunged to the lowest level in a month amidst the sanctions on Iran. The drop in oil prices is blamed on investors sentiments that Russia, U.S., and Saudi Arabia have the potential to fill Iran’s oil supplies gap in a short-term.
The Dow Jones Industrial Average dropped 122.35 points to 26307.79. The S&P 500 index slipped 0.21% to 2917.52 after hitting an all-time high at the beginning of this week. The Nasdaq Composite extended its decline for the fourth straight day. The tech-heavy index has hit an all-time high last week.
Tesla remains the biggest winner in the bearish trading trend. Its shares rose close to 3% as the company announced that it is raising up to $2 billion – with almost $1.35 billion are likely to receive from convertible bonds. Apple, Microsoft and several other big companies have reported a modest decline in the past two sessions.