US stocks experienced losses today, with the Dow Jones Industrial Average falling 2.2% to 51,594.86, the S&P 500 dropping 1.5% to 7,316.39, and the Nasdaq Composite down 1.7% at 24,442.94. This downward trend, reflected in the MSCI All Country World Price index dropping 1.1% to its lowest level since June 11, followed the Federal Reserve's decision to keep interest rates unchanged, despite three of the 12 Federal Open Market Committee members dissenting in favor of a quarter-percentage-point hike. The benchmark interest rate remained in the 3.50%-3.75% range.
Interest-rate sensitive investments also reacted, with the 2-year Treasury yield falling 3.52 basis points to 4.242%. Conversely, the yield on benchmark U.S. 10-year notes rose 7.53 basis points to 4.679%, indicating concerns about future inflation. The dollar index fell 0.45% to 100.96, while the euro gained 0.54% against the dollar, reaching $1.1447.
Oil prices surged approximately 8% after renewed attacks in the Middle East raised fears of disruptions to global energy supplies and were further bolstered by a drop in U.S. crude inventories. This rebound in oil prices, combined with persistent inflation concerns, has led Fed funds futures traders to price in 60% odds of a rate hike in September. Ryan Detrick, chief market strategist at Carson Group, noted that the market now expects the next rate hike to be in September due to hot inflation and surging crude oil prices.
