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US Fed Rate Hike By 75bps Knocked Down Stock Markets, Invest In US Stocks?


The US Stock markets were knocked down by the latest 75 bps interest hike by the US Federal Reserve to control inflation. S&P 500 was down by 0.65%, stood at 3,765.40, and Nasdaq Composite was down by 1.35%, stood at 11,069.13, Dow Jones Industrial Average (DJI) was down by 0.11%, stood at 30,151.10, at the time of writing. On the other hand, the US Dollar index gained to 111.18, up by 0.49%, till last traded, as safe haven concerns intensified after Russian President Vladimir Putin's threats of nuclear war.

US Fed Rate Hike By 75bps Knocked Down Stock Markets, Invest In US Stocks?

The US stock market extended the Fed sell-off, 8 out of 11 sectors were lower today. The consumer stocks were reported as the weakest, however energy stocks gained significantly. With this downbound in the stock markets, bears are finding new opportunities to buy good stocks at low prices. On the other hand, the 10-year Treasury yield was up 17bps to 3.68% and the 2-year yield was up 13bps to 4.12%.

Along with the US Fed, the Bank of England, and the Swiss National Bank have also decided to raise the interest rates by 50 bps - 75 bps, to deal with the climbing inflation, post-Pandemic.

Additionally, the Citi group recently mentioned, "We are adding 25bp of cumulative hikes to our projections and now expect a 75bp hike in November, 50bp in December, and 25bp in February for a terminal rate of 4.5-4.75%." This might further pull down the US stock markets. On the other hand, BofA (Bank of America) stated, "The Summary of Economic Projections was broadly hawkish and showed increased risks of a hard landing. Perhaps most important, the median policy rate forecast in the 'dot plot' pointed to an additional 125bp of hikes by year-end." Hence, this year will be a good time to invest in the US stock markets.

Story first published: Thursday, September 22, 2022, 23:36 [IST]
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