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Stocks Tumble as Fed Rate Hike Looms
17 Sep
Summary
- Dow Jones fell over 300 points as Treasury yields surpassed 5%.
- CNN Fear and Greed Index remained in 'Fear' zone on Tuesday.
- Traders expect a 92% probability of a Fed rate hike on Wednesday.
U.S. stocks experienced a significant downturn on Tuesday, marked by the Dow Jones Industrial Average falling more than 300 points. This decline coincided with the 10-year Treasury yield surpassing the 5% threshold and crude oil prices breaking above $105 per barrel. The market sentiment, as measured by the CNN Fear and Greed Index, remained in the "Fear" zone with a reading of 28, down from 31 previously.
Market participants are largely pricing in a 25-basis-point interest rate hike from the Federal Reserve on Wednesday, assigning approximately a 92% probability to this outcome. This would represent the first rate increase since July 2023. On the economic data front, the New York Fed's Empire State Manufacturing Index saw a notable decrease in September, falling to 7.6 from 20.6 in August and missing market expectations.
While most sectors on the S&P 500 closed lower, including consumer discretionary, consumer staples, and utilities, the energy and materials sectors managed to buck the trend. Forgent Power Solutions Inc. (FPS) and Radiant Logistics Inc. (RLGT) reported strong quarterly results, leading to significant share price increases for both companies. Investors are now looking ahead to earnings reports from Lennar Corp. (LEN) and LuxExperience BV-ADR (LUXE).
