Wall Street Rebounds After Fed Rate Hike, Tech Stocks Lead Gains

Wall Street experienced a significant turnaround on September 17, with major U.S. indices climbing after an initial negative reaction to the Federal Reserve's interest rate hike. The Nasdaq Composite led the advance, rising approximately 1.6%, followed by the S&P 500 with a 1% gain and the Dow Jones Industrial Average up 0.6%. This rally occurred a day after the Fed increased its benchmark interest rate by a quarter percentage point, the first such move since 2023.

Contributing to the market's recovery was a notable drop in oil prices, which fell by over 2%, according to Reuters. This decrease eased concerns about further inflationary pressure stemming from energy costs. Concurrently, yields on U.S. ten-year Treasury bonds retreated.

Despite the positive market movement, investors are still pricing in the possibility of additional rate hikes. The market's perceived probability of another increase by October rose to 51%, up from 44% the previous day, as reported by Reuters.

Technology and semiconductor stocks were at the forefront of the gains. Intel surged by approximately 10%, while Tower Semiconductor, an Israeli chip manufacturer, saw its stock climb 8% following the announcement of serial production of optical engines for AI infrastructure in partnership with New Photonics. Nvidia and Amazon also posted gains, each rising more than 2%. Overall, eight of the eleven sectors within the S&P 500 traded higher.

The Federal Reserve had previously raised the interest rate to a range of 3.75% to 4%, with 16 out of 18 policymakers anticipating at least one more hike by the end of 2026. This outlook initially triggered a decline in stocks and a rise in bond yields, but the market has since shown a different response, with falling oil prices and bond yields drawing demand back into equities, particularly in the tech and chip sectors.