Finance

In the first meeting led by Chair Kevin Warsh, the Federal Reserve maintained interest rates at 3.50%-3.75% but significantly adjusted its future outlook. Updated economic projections reveal that nearly half of the committee now anticipates at least one rate hike before the end of 2026, a reversal from previous expectations of potential cuts.

While mega-cap technology firms weighed down cap-weighted indexes, the Russell 2000 and equal-weight S&P 500 outperformed, signaling a shift toward broader market participation. Investors have increasingly pivoted toward value-oriented sectors and defensive areas like healthcare as high-valuation growth trades undergo a period of repricing.

The Federal Reserve's 2026 stress test results confirmed that the 32 largest U.S. banks remain well-capitalized and capable of lending through a severe global recession. Despite hypothetical losses exceeding $700 billion in the test scenario, all participating institutions stayed above their required minimum capital levels.