Dow down 300 Points on Fed Decision
Stocks are down after the Fed decided not to pursue an interest rate cut due to worries over high inflation and the Iran conflict.
Quick overview
- The Dow fell over 700 points on Wednesday and continued to decline by another 300 points on Thursday due to the Federal Reserve's decision to hold off on interest rate cuts.
- Inflation concerns and rising oil prices, particularly after a military strike in Iran, contributed to the dip in stock indices, with the Nasdaq and S&P 500 both losing around 0.8% and 0.7%, respectively.
- Investors are increasingly cautious amid ongoing geopolitical tensions and high inflation, leading to a reluctance to invest in stocks and other risky assets.
- Micron Technology saw a significant drop of 6% despite reporting nearly triple the revenue from the previous quarter, indicating investor disappointment.
On Wednesday, the Dow fell more than 700 points, and on Thursday, the decline continued with the loss of another 300 points after the Federal Reserve decided to wait on interest rate cuts.
Inflation worries caused stock indices to dip on Thursday, with the Nasdaq losing 0.8% and the S&P 500 losing 0.7%. The Dow dropped 0.7% as well after Brent crude oil prices rose by 4% and the Federal Reserve cited inflation and the Iran conflict as reasons for not issuing interest rate cuts.
Any hope that the Fed would help lift the stock market this week has been erased, and we anticipate further decline into the weekend. Rising costs are certainly bothering consumers, and the February PPI came in higher than expected. The Fed issued a statement on Wednesday saying that inflation is still “somewhat elevated.”
Stock Decline on Gas Field Strike
One of the biggest factors influencing the stock market this week is the Israeli military strike on the world’s largest gas field at South Pars in Iran. Iran fought back by hitting energy facilities in Qatar, and President Donald Trump responded by saying that any more such attacks would result in the United States massively blowing up “the entirety of the South Pars gas field.”
Investors in the United States are rightly spooked by the ongoing conflict and the effect it could have on the oil and gas markets as well as the immediate knockdown effect on the stock market. As war continues and gas prices rise, investors are being more careful with their money and are becoming less willing to invest in stocks, cryptocurrency, and other potentially risky assets.
West Texas Intermediate crude oil futures rose 1% on Thursday and hit $97 a barrel. Meanwhile, BP (BP) is up 2.58% for the day as energy companies profit off climbing prices. Chevron (CVX) added 0.40% to its total, hitting an all-time high at $199 per share.
One of the biggest losers this week, though, was Micron Technology (MU), which lost 6% after posting quarterly earnings. The company posted nearly triple the revenue from the previous quarter and yet still disappointed. Because investors were expecting it to do even better.
The Dow hit an intraday low on Wednesday, falling underneath its 200-day moving average. A few stocks may be peaking right now, but overall, the markets are low and under intense pressure and the Middle East conflict continues and inflation remains high.
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