Stocks mixed as Fed hikes rates

Macroeconomic/ geopolitical developments

• US stocks finished mixed, with the Nasdaq rising 0.72%, while the S&P 500 fell 0.08% and the Dow dropped 1.7%. Technology and healthcare led the stronger areas of the market, while smaller companies and financial stocks came under pressure.

• The Federal Reserve raised interest rates by 25 basis points to 3.75% to 4.00%, as widely expected by markets. Officials indicated that another 25 basis point hike could come before the end of 2026.
• The 10 year Treasury yield briefly reached 5.04%, its highest level since 2007, before pulling back toward 5%. Yields remained elevated, keeping borrowing costs and the relative attractiveness of bonds compared with equities in focus.

• Oil prices retreated after WTI briefly moved above $106 a barrel, as concerns over the scale and duration of Saudi supply disruptions eased. WTI ended around $100.30 and Brent near $103.87, although Middle East tensions continued to pose risks to energy markets.
• AI related stocks initially fell after calls for greater safeguards around the development of advanced models raised concerns about the pace of future AI investment. The sector subsequently recovered as investors considered whether increased spending on AI safety and infrastructure could support continued growth.
• Global Flash PMI data will provide an early indication of economic activity across the US, Eurozone, Germany and the UK, with investors watching closely for signs of changing growth and inflation pressures. AI safety, Middle East developments, Federal Reserve commentary, US Durable Goods Orders will also be in focus.

Global financial market developments

• US and global equity averages were mixed.
• US and European bond yields moved up then back down on the week
• The US Dollar Index moved notably higher for the week.
• Gold futures nudged higher on the week.
• Oil futures rallied to a multi-month peak before pulling back to lower on the week.

Key this week

Central Bank Watch: The main central bank activity this week is the People’s Bank of China Interest Rate Decision on Monday.

Macro Data Watch: Macro data is light this week, the main macro data releases to look out for are the Global Flash PMI data on Wednesday, Canadian Retail Sales and US Initial Jobless Claims both on Thursday, then US Durable Goods Orders Friday.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued