U.S. stocks continued their retreat on Thursday as Wall Street grappled with the Federal Reserve's hawkish message alongside its decision to hold interest rates steady. Tech stocks led the broad equity decline, with the S&P 500 (^GSPC) sinking 1.1%, Dow Jones Industrial Average (^DJI) dropping 0.6%, and the tech-heavy Nasdaq Composite (^IXIC) falling almost 1.3%.
The central bank's forecast led investors to believe that policymakers anticipate interest rates staying "higher for longer". The exact duration of this "longer" period remains a topic of debate, especially as the central bank signaled another rate hike at one of its final two meetings this year. Goldman Sachs has revised its forecast for a Fed rate cut to the fourth quarter of 2024 in response to this outlook.
This prospect of a prolonged period of elevated rates has unsettled some investors, as it would exert pressure on stocks and bonds. The yield on the benchmark 10-year Treasury rose on Thursday, at one point reaching its highest level in over 15 years.
However, Fed Chair Jerome Powell emphasized that policy will be dependent on economic data during his press conference. Official figures released on Thursday indicated that jobless claims last week fell to their lowest level since January, signaling strength in the U.S. labor market.
In other central bank news, the Bank of England decided to hold interest rates steady on Thursday, pausing tightening after hiking 14 times consecutively following an unexpected slowdown in inflation. In a couple of surprises from European central banks, the Swiss National Bank kept its rates on hold while Norway's central bank hinted at another rate hike in December following September's increase.
In individual stock news, shares of FedEx (NYSE:FDX) saw a significant rise after reporting a substantial quarterly profit beat.
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