Stocks End Sharply Lower in Volatile Trading As Fed Hikes Interest Rate by 75 bps
2:23 pm Wednesday, September 21st, 2022
The stock market was confined to a narrow trading range until the FOMC rate hike decision at 2:00 p.m. ET fueled whipsaw price action. The FOMC voted unanimously to raise the target range for the fed funds rate by 75 basis points, as expected, to 3.00-3.25% and suggested that further rate increases will be appropriate. The Summary of Economic Projections conveyed a higher terminal rate of 4.60%, versus 3.80% with the June projection.
The initial reaction was a heavy inclination to sell before a rebound effort, supported by falling Treasury yields, took the S&P 500 above the 3,900 level. The market ran into resistance there, however, and sold off sharply, finishing at its lows for the day.
Treasury yields popped on the news. The 2-year rate, which hit its highest level since 2007, last traded at around 4.1%. The 10-year rate jumped to about 3.6%.
Consumer staples has General Mills (GIS) to thank for its first place spot. The company enjoys outsized gains after reporting better-than-expected fiscal Q1 results and issuing above-consensus FY23 EPS guidance.
Another bright spot in the market is defense/weapon manufacturers, which trade up after President Putin mobilized 300,000 reservists for the war in Ukraine and threatened to use nuclear weapons if provoked. Northrop Grumman (NOC) and Lockheed Martin (LMT) are winning standouts for the group.
Energy complex futures are mixed. WTI crude oil futures are down 1.0% to $83.14/bbl while natural gas futures are up 0.3% to $7.74/mmbtu.
