Market Update: Stocks Fall After Fed Decision; Bitcoin Cash Leads Cryptocurrency Rebound
U..S. stocks declined sharply Wednesday afternoon following the Federal Reserve’s decision to keep interest rates on hold. The decision, which was widely expected, gave no indication that policymakers would stand pat on their commitment to gradually normalize monetary policy this year.
After a tepid trading session, all of Wall Street’s major indexes headed for losses. The S&P 500 Index fell 0.7% to close at 2,635.67, with nine of 11 primary sectors finishing in the red. Consumer staples, telecommunication, healthcare and financials each fell more than 1%.
The Dow Jones Industrial Average declined 174.07 points, or 0.7%, to close at 23,924.98. Meanwhile, the technology-heavy Nasdaq Composite Index settled 0.4% lower at 7,100.09.
Despite the general decline, Apple shares surged more than 4% after the iPhone maker reported better than expected earnings results late Tuesday. The earned $2.73 per share on revenue of $61.1 billion. Market analysts had projected EPS growth of $2.67 on sales of $60.81 billion.
A measure of implied volatility known as the CBOE VIX edged higher on Wednesday, although the underlying trend signaled prevailing calm on Wall Street. The fear index rose nearly 3% to close at 15.94 on a scale of 1-100 where 20 represents the historic average.
Fed Leaves Rates on Hold
The Federal Open Market Committee (FOMC) concluded its two-day meeting in Washington on Wednesday by voting to keep the benchmark interest rate at 1.75%.
Officials said that overall inflation and core inflation “had moved close to 2%,” which is the target for price stability set forth by the central bank.
“Inflation on a 12-month basis is expected to run near the committee’s symmetric 2% objective over the medium term,” the FOMC statement read.
The core personal consumption expenditure (PCE) index, which is the Fed’s preferred measure of inflation, surged 2.5% in the first quarter, the Commerce Department reported last week. That was the biggest gain since 2007.
Fed officials are scheduled to meet next on June 12-13, where they are widely expected to vote in favor of raising interest rates.
Bitcoin Cash Leads Crypto Market Rebound
Cryptocurrencies rebounded sharply on Wednesday despite a sharp drop in trade volumes. Valued in terms of market capitalization, cryptocurrencies peaked above $431 billion, according to CoinMarketCap. At the time of writing, the total market was worth $428.1 billion for a gain of roughly $14 billion on the day.
Bitcoin cash was the biggest gainer percentage-wise, rising nearly 11% to $1,143. The cryptocurrency generated more than $1.1 billion in daily turnover.
IOTA was also among the biggest gainers, as values rose more than 18% to $2.25 a unit.
Bitcoin and Ethereum, the world’s first and second largest cryptocurrencies by market cap, rose at least 1% on Wednesday.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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