US stock market shakes after Fed decision to raise interest rates

Ngọc Khuê |

After the Fed raised interest rates to 3.75% - 4.0%, the US stock market plummeted while the USD rebounded sharply.

Closing the trading session on September 16 (local time), all three major indexes of US stocks sank into red, in which the S&P 500 aggregate index fell 0.5% to 7,551.81 points, the Dow Jones index lost 1.2% to 51,461.90 points and the Nasdaq Composite slightly fell below 0.1%.

Contrary to the stock market, the USD index recorded an increase of 0.71%, while also increasing in price against key currencies such as the euro, British Pound and Japanese Yen.

Although the decision to raise interest rates by another 25 basis points to the range of 3.75% - 4.0% was predicted by investors in advance, the market's negative reaction stemmed from a tougher-than-expected message from the Fed.

The majority of policymakers predict that there will be at least another wave of interest rate hikes before 2026 closes, causing financial circles to worry that the anti-inflation war will drag on and more monetary tightening measures are needed.

This decision also increased the rift between the head of the central bank and the White House.

On social media, President Donald Trump continued to demand that the Fed immediately cut interest rates, increasing pressure on the independence of the central bank in the context of economic issues being the focus of voters' attention ahead of midterm elections.

White House spokesman Kush Desai called the Fed's move "quite regrettable", and reiterated President Donald Trump's clear stance on wanting to cut interest rates.

In the opposite development, European stock exchanges such as London, Paris and Frankfurt still maintained a slight increase thanks to cooling world oil prices. Brent oil fell 2.7% to 105.83 USD/barrel after information about increased US crude oil inventories and the Saudi Arabia oil pipeline incident is expected to be resolved soon.

International investors are currently focusing their attention on the next policy meetings of the Bank of England and the Bank of Japan at the end of the week.

Ngọc Khuê
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