Finance

In the first meeting under newly appointed Chairman Kevin Warsh, the Federal Reserve unanimously voted to keep the benchmark federal funds rate at a range of 3.50% to 3.75%. Despite the hold, the committee's updated Summary of Economic Projections revealed a hawkish shift, with nearly half of the members now projecting at least one interest rate increase before the end of 2026. The central bank cited persistent inflation and energy-related supply shocks as primary reasons for the cautious outlook.

U.S. Treasury yields rose sharply after the Federal Reserve's policy announcement, with the 2-year note jumping 16 basis points to reach 4.21%, its highest level in over a year. Simultaneously, the U.S. dollar index climbed roughly 1%, marking one of its strongest daily performances of the year. These movements reflect a market recalibrating for a "higher-for-longer" interest rate environment as the Fed prioritizes its 2% inflation target over near-term easing.

High-growth sectors faced intense pressure, with the technology-heavy Nasdaq underperforming other major benchmarks. NVIDIA shares fell 1.33% to close at $204.65, continuing a downward trend that has seen the stock lose 4.7% over the last two weeks following a recent analyst downgrade. Other megacap companies, including Meta Platforms, Microsoft, and Amazon, also saw significant price declines as rising yields weighed on valuations across the communications and consumer cyclical sectors.