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US Equity Indexes Rise as Treasury Yields Slump After Fed Reaffirms Commitment to Controlling Inflation

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(Updates with index/price moves and geopolitical news from the first paragraph.)

US equity indexes rose as government bond yields slumped after the Federal Reserve reaffirmed its commitment to taming inflation while tightening policy, and as crude oil prices fell.

The Nasdaq Composite jumped 1.5% to 26,354.1, the S&P 500 climbed 0.9% to 7,617.4, and the Dow Jones Industrial Average advanced 0.4% to 51,677.9 after midday Thursday.

The US Federal Reserve raised its benchmark lending rate by 25 basis points in a unanimous vote on Wednesday to combat sticky inflation, while signaling another hike later this year. The Federal Open Market Committee lifted the fed funds rate to 3.75% to 4%, the first time it has tightened monetary policy since July 2023.

"After more than five years of significantly elevated inflation, a period which included a rate cutting cycle, the new Warsh Fed appears to be taking a step in the right direction to combat dangerously high price pressures," Lindsey Piegza, Stifel chief economist, said in a note.

US Treasury yields retreated after midday. The 10-year yield fell 5.1 basis points to 4.95%. The two-year yield slid 4.2 basis points to 4.69%.

Meanwhile, China has privately asked Tehran to help rein in Yemen's Houthis after an appeal to Beijing by Saudi Arabia following the Iran-backed group's military blitz in the past week, three Iranian sources familiar with the matter told Reuters. Riyadh turned to China for help after the Houthis made rapid advances along the Red Sea coast and around the Bab el-Mandeb Strait, moves that have left Saudi oil exports and shipping more exposed, the sources told the news agency.

The front-month US West Texas Intermediate crude oil contract dropped 1.7% to $100.74 per barrel, and the global benchmark North Sea Brent fell 2.3% to $103.26 per barrel.

What else is happening in Japan?

Japan

US Equity Markets End Lower After Federal Reserve Increases Policy Rate

US equity indexes ended lower Wednesday after the Federal Reserve hiked interest rates, citing persistent inflation.* In a unanimous decision, the Fed raised the policy rate by a quarter percentage point to between 3.75% and 4%, the first hike from the central bank since July 2023. The Fed also signaled that another hike could come later this year if inflation continues to persist.* According to the Census Bureau, Retail sales grew 1.2% in August following a 0.5% decline the month before, compared with 0.8% increase in a Bloomberg-compiled survey.* October West Texas Intermediate crude oil fell $3.72 to settle at $102.11 per barrel, while November Brent crude, the global benchmark, was last seen down $3.28 at $105.47.* Axon Enterprise (AXON) shares rose about 6%, among the top performers on the S&P 500 and the Nasdaq, after the company priced an offering of $1 billion of convertible senior notes due 2031.* J.B. Hunt Transport Services (JBHT) expects earnings from Q2 to Q3 to fall 5% to 10%, Chief Financial Officer Brad Delco said Tuesday on a conference call. Shares were down roughly 13%, among the worst performers on the S&P 500.

Dow JonesNasdaq CompositeS&P 500$AXON$JBHT
Japan

US Equity Indexes Mixed as Fed Set to Tighten Monetary Policy

(Updates with index/price moves and geopolitical news from the first paragraph.)US equity indexes traded mixed ahead of a likely interest-rate increase from the Federal Reserve later on Wednesday.The Nasdaq Composite rose 0.8% to 26,195.6, the S&P 500 climbed 0.4% to 7,619.2, and the Dow Jones Industrial Average was little changed at 52,115.1 after midday. All sectors except energy and financials advanced. Technology and industrials led gainers.Ahead of the Fed's policy announcements on Wednesday, including an update of the Summary of Economic Projections, interest rate traders are now pricing in a 93% probability that the central bank will raise its target rate by 25 basis points, up from 33% a month ago, according to the CME FedWatch tool. The remaining likelihood is that the central bank will extend its pause.US Treasury yields, however, retreated ahead of the policy decision. The 10-year yield dropped 4.1 basis points to 4.96%, declining from its highest since 2007. The two-year yield slumped 4.4 basis points to 4.62%, after touching multi-year highs this week.Saudi Arabia said a drone launched by the Houthis towards Mecca was intercepted, while the Iran-aligned militia group denied targeting the holy site, calling the accusation a "nauseating lie," Al Jazeera, a Middle Eastern broadcaster, reported Wednesday. The Houthis said they targeted oil facilities in Saudi Arabia's Yanbu port and Khamis Mushait airbase, the news report said, adding that Riyadh has not commented on the claims.The front-month US West Texas Intermediate crude oil contract sank 3.9% to $101.68 per barrel, and the global benchmark North Sea Brent slid 3.3% to $105.17 per barrel.Gold futures jumped 1.4% to $4,393.2, and silver futures rose 2% to $65.11.

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Japan

US Equity Futures Rise Pre-Bell as Traders Await Fed Rate Decision

US equity futures were edging mostly higher pre-bell Wednesday as traders geared up for the interest rate decision from the Federal Reserve later in the day.Dow Jones Industrial Average futures were 0.2% higher, S&P 500 futures were up 0.3%, and Nasdaq futures were 0.5% lower.The Federal Open Market Committee's statement following Wednesday's meeting is due for release at 2:00 pm ET, with Federal Reserve Chairman Kevin Warsh's press conference scheduled to begin at 2:30 pm ET. There is a 92.5% chance the Fed will raise rates by 0.25%, according to the CME Group FedWatch indicator.Oil prices declined amid a Reuters report that Saudi Arabia is offering crude oil cargoes via ship-to-ship transfer at Oman's Sohar port. Further, US crude oil, gasoline, and distillate inventories increased last week, according to the report.The front-month global benchmark North Sea Brent crude was down 1.4% at $107.25 per barrel and US West Texas Intermediate crude was 2.3% lower at $103.40 per barrel.The August retail sales report, slated for 8:30 am ET, is forecast to show a 0.8% increase following a 0.6% decline in the previous month, according to estimates compiled by Bloomberg.The August import price index is expected to show a 0.5% month-over-month gain after a 0.4% decrease previously. The export price index is projected to show a 0.6% increase, compared with a prior decline of 1.3%.The September US housing market index, slated for 10 am ET, is expected at 34, compared with 35 from the prior month.

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