New york: On Wednesday, the New York Stock Exchange closed lower after the Federal Reserve kept its policy rate unchanged, resulting in approximately $800 billion being wiped from share markets. The Dow Jones Industrial Average dropped 1.63%, losing 768.11 points to close at 46,225.15. Meanwhile, the Nasdaq Composite fell 1.46%, shedding 327.11 points to finish at 22,152.42, and the S and P 500 declined 1.36%, down 91.39 points to 6,624.70. The Volatility Index (VIX), commonly known as the market's "fear index," increased by 12.16% to 25.09.
According to Anadolu Agency, equity markets faced downward pressure as ongoing tensions in the Middle East, fluctuating oil prices, and macroeconomic data released in the US captured investor attention, alongside the Federal Reserve's monetary policy decisions. Disruptions in the Strait of Hormuz and concerns over supply due to US and Israeli attacks on Iran, followed by Iran's retaliatory strikes, contributed to rising oil prices, adding to market pressure. As of 2145GMT, Brent oil prices surged by 7.5%, surpassing $111 per barrel, while West Texas Intermediate (WTI) crude oil climbed 5% to reach $100 per barrel.
Amid fears that escalating energy costs are heightening inflationary pressures, US data revealed an acceleration in producer inflation for February. The US Producer Price Index showed a 0.7% increase month-over-month and a 3.4% rise year-over-year, exceeding expectations and reaching its highest annual level in the past year.
On the monetary policy front, the Federal Reserve maintained its policy rate within the 3.5-3.75% range, aligning with market expectations. The Fed also released its economic projections, keeping its forecast for the federal funds rate at 3.4% by the end of the year, signaling the likelihood of a single rate cut in 2026.
European stock markets mirrored the US trend, with declines observed across most indices on Wednesday, except in Spain. The pan-European Stoxx Europe 600 index fell 0.75% to close at 597.93 points. The UK's FTSE 100 decreased by 0.94% to 10,305.29, Italy's FTSE MIB 30 dropped 0.33% to 44,741.34, and France's CAC 40 slipped 0.06% to 7,969.88. Germany's DAX 40 fell 0.96% to 23,502.25, while Spain's IBEX 35 bucked the trend, posting a modest increase of 0.29% to 17,299.10.