© Reuters.
By Liz Moyer
Investing.com -- U.S. stocks were sinking on Thursday after the Federal Reserve signaled its higher for longer stance on interest rates.
At 10:20 ET (15:20 GMT), the Dow Jones Industrial Average was down 638 points or 1.9%, while the S&P 500 was down 2% and the NASDAQ Composite was down 2.3%.
The Fed said on Wednesday that its benchmark rate would likely top out above 5%, which is higher than expected just a few months ago, and indicated it wasn’t inclined to pause or pivot to rate cuts anytime soon. That is pressuring stocks as investors had hoped for the turn sometime in 2023.
The central bank raised rates by a half-percentage point, as expected, slower than the pace of hikes at its four earlier meetings this year. Chair Jerome Powell said there are some signs of inflation cooling but not enough to convince the policymakers that inflation was on its way to a sustained direction toward the target 2%.
Traders are expecting another two rate hikes next year, each of at least a quarter of a percentage point.
Data on Thursday indicated a steeper than expected drop in retail sales. Meanwhile, new unemployment claims dropped last week and were lower than expected. Both the European Central Bank and the Bank of England raised rates by a half-percentage point.
Shares of Tesla Inc (NASDAQ:TSLA) rose 1.3% after CEO Elon Musk disclosed another $3.6 billion in stock sales. The stock is down more than 55% this year.
Oil fell. Crude Oil WTI Futures were down 0.8% to $76.60 a barrel while Brent Oil Futures were down 0.7% to $82.16 a barrel. Gold Futures were down 1.6% to $1790.
