The Fed hiked rates for a 10th time in its fight against inflation.
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What you need to know today
- The Federal Reserve raised interest rates — having now hiked 10 times and by a total of 500 basis points — and dropped a tentative hint that its current tightening cycle is at an end. Read Fed Chair Powell's market-moving comments from after the move, and see what changed in the Fed's new statement.
- Asia markets were under pressure following overnight developments in the United States. A private survey showed China's factory activity contracted for the first time in three months. European markets are set to lose steam as investors await the European Central Bank's rate decision hours after the Fed.
- U.S. lawmakers in charge of looking into the economic relationship with China are asking retailers Temu, Shein, Nike and Adidas North America about the possible use of forced labor, which is a violation of U.S. trade law. Such practices would constitute violations of the 2021 Uyghur Forced Labor Prevention Act, according to the lawmakers.
- Google employees aren't happy about CEO Sudar Pichai's hefty pay raise last year, which filings show swelled to $226 million, including stock awards. Workers criticized Pichai for not taking a pay cut while the company is slashing costs, which has included the elimination of 12,000 jobs.
- PRO Apple's quarterly results will be the market's next big test. JPMorgan breaks down whether the company will deliver.
The bottom line
Good morning from Singapore. The Fed's move was widely in line with expectations, but Jerome Powell was quick to dash hopes for rate cuts. Concerns linger over what comes next.
As Jeffrey Gundlach argued, the regional banking crisis won't come to an end until the central bank decides to bring rates down. The latest hike brings the fed funds rate to a target range of 5% to 5.25%, the highest it's been since August 2007.
But investors wondering what's next have clues to work with: Regional banks continued to plunge after the Fed move and on a report that PacWest Bancorp is weighing strategic options, including a potential sale. The bank's shares cratered nearly 60% in extended trading on Wednesday. Shares of Western Alliance Bancorp dropped 29%, while Comerica slid 13% and KeyCorp shares fell 11%.
Traders are feeling the burn, again, it seems — with veteran banking analyst Christopher McGratty comparing the steep falls to what banks experienced in March, when the failure of Silicon Valley Bank sparked a selloff in regional banks. The KBW head of U.S. bank research told CNBC that people are "trading stocks on fear and sentiment, and not fundamentals."
European investors await the European Central Bank's rate decision, following quick on the heels of the Federal Reserve. More economic data will shape the trajectory of the global fight against inflation, alongside China's uneven recovery path.
The Caixin purchasing managers' index delivered disappointing factory activity, the most recent in a run of data that has missed expectations. Meanwhile, South Korea's finance minister told CNBC that the country's relationship with Japan is at a "turning point," ready to leave behind the trade tensions that have flared between two U.S. allies.
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