The Fed Holds Interest Rates in a 10–2 Vote. Here's What This Means for Artificial Intelligence (AI) Stocks.
Yahoo Finance ·
Fed decision days often spark a major swing in the S&P 500 (SNPINDEX:^SPX), as interest rates play a big role in stock valuations. However, Wednesday's announcement, which held the Fed funds rate steady at 3.75%-4%, didn't do much to move markets. The S&P 500 briefly jumped 30 points or 0.4% when Fed Chair Kevin Warsh took the podium around 2:30 ET. By the end of his press conference, the index had given up those gains, though it moved modestly higher before the closing bell. Also notable about the decision was that it was not unanimous, unlike most Fed rate decisions. Ten members of the board voted to raise rates, while Lisa Cook and Beth Hammack voted to raise rates by a quarter of a percentage point. Hammack is a noted Fed hawk who has voted against raising rates before, while this was Cook's first time voting in opposition. Those two members didn't explain their votes, and this session was without the summary of economic projections, or "dot plot" that the central bankers provide to show their long-term view, so investors got little insight into their opinions. The Fed funds rate, which is the benchmark rate for the economy, is especially meaningful to the AI sector, where some AI infrastructure stocks have tumbled in response to rising interest rates.
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