Wall Street declines amid rate hike

The U.S. financial markets experienced sharp declines after the Federal Reserve's decision to keep interest rates within the range of 3.50% to 3.75%, despite opposition from three Federal Open Market Committee members who advocated for a 25 basis point increase. The Dow Jones Industrial Average fell by 2.14%, losing 1,129 points, while the S&P 500 declined by 1.50%, and the Nasdaq, which is dominated by tech stocks, dropped by 1.68%. This occurred amid investors' expectations that rates would remain unchanged, amidst ongoing inflation driven by rising global fuel and food prices, as well as anticipation of earnings results from major tech companies like Microsoft and Meta. There are growing concerns about the sustainability of hefty spending on artificial intelligence and its impact on cash flows. Additionally, stocks of AI-related chip companies declined, with some firms like SK Hynix and Virtuff posting lower profits, despite forecasts of approximately 40% profit growth in the tech sector during the second quarter.

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