US Markets Slump as Fed Signals Potential Rate Hikes Amid Inflation Fears

Wall Street faced a significant downturn on Wednesday as the S&P 500 and Nasdaq both tumbled by more than 1%. The sell-off was triggered by a hawkish shift in tone from the Federal Reserve, leading traders to reconsider the likelihood of interest rate hikes later this year.

Fed Holds Rates Steady but Shifts to Hawkish Stance

While the Federal Reserve maintained interest rates within the expected 3.50%–3.75% range, the underlying policy sentiment shifted dramatically. New quarterly projections revealed that nine central bank officials now expect at least one rate hike by the end of 2026. Notably, the official policy statement removed previous language that had suggested the possibility of rate cuts within this year.

New Fed Chair Kevin Warsh broke with traditional central bank practices by declining to submit a formal interest-rate-path projection. Instead, Warsh emphasized a singular commitment to price stability, signaling a rigorous approach to taming inflation pressures exacerbated by recent oil-price spikes stemming from the Iran war.

Traders Pivot Toward Higher Interest Rate Bets

The Fed's commentary caused an immediate recalibration in market expectations. According to the CME Group's FedWatch tool, the probability of rates remaining steady through the end of the year plummeted from 40% on Tuesday to just 15.7% following the announcement.

Market participants are now pricing in significant volatility. Currently, expectations for a 25-basis-point rate hike by December stand at nearly 38%, while the probability for a more aggressive 50-basis-point hike has climbed to approximately 33%. This "hawkish tilt" has dampened the recent market rally that had been buoyed by earlier hopes for a U.S.-Iran peace deal.

Major Indices and Stock Specific Movements

The shift in monetary policy sentiment resulted in notable losses across all major U.S. indices:

در اخبار مربوط به سهام شرکت‌ها، سهام CME Group پس از اعلام خبر کناره‌گیری تری دافی، مدیرعامل شرکت، در تاریخ ۱ مارس برای تبدیل شدن به رئیس اجرایی، با کاهش مواجه شد. در مقابل، پس از تغییر ماهیت شرکت Allbirds به یک نهاد متمرکز بر هوش مصنوعی، تغییر نام به Smartbird و انتصاب نادیا کارلستن، مدیر اجرایی سابق Amazon، به عنوان مدیرعامل جدید، شاهد جهش قیمت سهام آن بودیم.

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