US Stocks Fall After Fed Holds Rates – S&P Down 0.5%
Major US stock indices declined overnight after the Federal Reserve held interest rates as expected and signalled no urgency in adjusting policy. The Dow Jones fell by 0.31%, the S&P 500 dropped 0.47%, and the Nasdaq lost 0.51% by the close of trading.
The US dollar edged higher, with the DXY gaining 0.1% to reach 107.99. US Treasury yields also moved higher, with the 2-year yield rising by 2.3 basis points to 4.218% and the 10-year yield increasing marginally by 0.2 basis points to 4.534%.
Oil prices fell after US stockpiles increased more than expected, with Brent crude down 0.8% to $76.82 per barrel and WTI declining by 1.11% to $72.95 per barrel. Gold prices eased in response to the stronger dollar, losing 0.24% to settle at $2,756.65.
ECB Next to Announce Interest Rate Decision
Following the recent decisions from the Bank of Canada and the Federal Reserve, the European Central Bank is set to announce its latest rate decision later today. Markets anticipate a 25-basis-point cut, lowering rates from 3.15% to 2.90%. Any unexpected decision could trigger significant moves in the euro.
Market reaction is likely to be driven by key updates in the ECB’s policy statement and later by President Christine Lagarde’s press conference. Given the Federal Reserve’s less dovish stance, a more accommodative ECB could attract major long-term market participants, particularly if interest rate differentials widen.
More Central Bank Action Ahead for Traders
The past few trading sessions have been eventful, and today promises to be another volatile day, particularly in the latter half. The Asian session is expected to remain relatively calm, with limited macroeconomic data and many financial centres closed for Lunar New Year celebrations.
However, market activity is likely to pick up significantly once Europe opens, with the ECB’s rate decision as the key focus. In between the ECB announcement and the subsequent press conference, US Advance GDP data and weekly unemployment claims will also be released, potentially driving volatility in EUR/USD.
Later in the day, US Pending Home Sales data will be published, though market sentiment will likely be shaped by earlier economic releases and any fresh geopolitical developments.
