The Federal Reserve raised its benchmark rate by a quarter‑percentage point on Wednesday, its first hike since 2021, and warned that at least one more increase is likely before year‑end. The announcement sent both stocks and bonds lower the following day as markets digested the more hawkish stance.
By Thursday, the mood had shifted. The S&P 500 posted a 1.1% gain, while the Nasdaq outperformed the broader market with an even larger rise. At the same time, the yield on the 10‑year Treasury note slipped below the 5% threshold, and the Wall Street Journal’s dollar index retreated after a sharp jump the previous day.
Analysts said the rebound reflects a finer‑tuned reading of the Fed’s tone, suggesting that investors now view the rate hike as a measured step rather than a signal of aggressive tightening. The easing of bond yields also points to reduced fear of an immediate credit crunch.
Oil prices contributed to the optimism. Brent crude futures fell 2%, sliding to under $104 a barrel after having peaked above $109 earlier in the week. Traders cited hopes that damage to a Saudi Arabian export pipeline would not severely curtail shipments, easing concerns about supply disruptions.
In related central‑bank news, the Bank of England chose to keep its policy rate unchanged on Thursday, diverging from the Fed’s move and underscoring a split among major monetary authorities on the path forward for interest rates.