Here's What Wall Street Is Saying About the Fed's Rate Hike

For investors trying to gauge levels of hawkishness at the Federal Reserve, Wednesday was an example of words carrying more weight than actions.

As part of its rate decision, Fed officials projected that rates will rise at least another half a percentage point next year. That was enough to send stocks lower and lift Treasury yields higher briefly — moves the Fed itself might welcome.

Since the central bank’s last policy decision on Nov. 2, the S&P 500 had climbed almost 7% through Tuesday, marking the best intra-meeting performance since June 2020. A US Financial Conditions Index kept by Goldman Sachs Group Inc. slipped 0.8% for the largest easing between Fed meetings since August 2009.

“Slower growth forecasts, yet more hikes. That’s not a great combination for markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “The bigger uncertainty for markets right now is growth, not the Fed.”

Chair Jerome Powell’s comments at the news conference following the rate decision initially darkened the market’s mood.