The stock market experienced a sharp sell-off on Wednesday following the Federal Reserve’s latest interest rate decision and concerns about economic growth, Investor’s Business Daily reports.
The Dow Jones Industrial Average plunged more than 1,100 points, while the S&P 500 and Nasdaq also dropped significantly, with the small-cap Russell 2000 seeing a notable decline. Despite a quarter-point interest rate cut by the Fed, the outlook for further cuts in 2025, coupled with growing uncertainty around future economic conditions, led to a sharp increase in Treasury yields, which reached their highest levels since May.
The market’s decline was further compounded by a poor earnings report from Micron Technology. The memory chipmaker posted results that beat expectations but issued weak guidance for the upcoming quarter, leading to a more than 10% drop in its stock price after hours. This drop contributed to a broader sell-off in semiconductor stocks, including key players like Western Digital and Seagate Technology.
In addition to the impact of Micron’s disappointing earnings, Tesla saw a significant drop of 8.3% in its stock price following the Fed’s decision. However, despite this setback, Tesla remains above its moving averages, suggesting that it could stabilize if the broader market rebounds. Other high-profile stocks, including Nvidia and Taiwan Semiconductor, also faced pressure, with Nvidia ultimately reversing an early morning rally to close lower on the day.
On the macroeconomic front, the Federal Reserve’s decision to cut rates by 25 basis points was in line with expectations, but Fed Chair Jerome Powell’s comments about economic uncertainty tempered the outlook. While the Fed’s dot-plot projections indicated two additional rate cuts in 2025, Powell emphasized the importance of caution in future policy moves, citing potential risks such as tariffs under a possible Trump administration. This uncertainty, combined with the potential for continued inflationary pressures, led to a rise in Treasury yields, which reached 4.53% at their peak, the highest since May.
The dollar also strengthened, climbing to a two-year high, further contributing to the broader market volatility. Bitcoin experienced a notable decline, dropping 5.7% to $100,636, reflecting investor caution in the face of uncertain economic conditions.
Despite the broader sell-off, there were signs of resilience in certain areas of the market. Nvidia, for example, initially saw a jump but ended the day lower. The stock has been in a downtrend, although it remains an active component of investment strategies for many. Similarly, Taiwan Semiconductor, despite its 2.5% drop, is holding near key technical levels.
