S&P 500
7,650.50
wk −0.1%
For the first time in three years the Federal Reserve raised rates — unanimously — and told markets more may follow. Stocks flinched, rebounded, and finished a whipsaw week roughly where they started, with the 10-year Treasury sitting at 5%.
It finally happened. On Wednesday the Federal Open Market Committee voted 12–0 to raise the federal funds rate a quarter point to 3.75%–4.00% — the first hike in more than three years — and signaled that it is not necessarily done. Stocks spent the week bracing for it, sold off when Chair Kevin Warsh drove the point home, then turned around and rallied on Thursday as if to prove the world had not ended. By Friday’s triple-witching close, the S&P 500 sat almost exactly where it began the week. The number didn’t move much. The regime did.
This was a tale of two halves — three days lower into the decision, two days clawing back after it. The dispersion across the indexes tells the story: the Dow, weighed by rate-sensitive and industrial names, fell 1.7% on the week, while the Nasdaq actually finished higher as the AI complex stabilized and dip-buyers returned. Here is how it unfolded.
The hike itself was priced. The message around it was not. In its updated projections, 16 of 19 policymakers penciled in at least one more increase this year, lifting the median year-end forecast toward 4.1% from 3.8% in June. Warsh spent his press conference repeating that inflation remains too high and that the economy, if anything, is strengthening — the opposite of the “one-and-done” framing the bulls hoped for. That is why an anticipated hike still knocked the Dow down 631 points on Wednesday: the market didn’t fear the move, it feared the trajectory.
| The September decision | Detail |
|---|---|
| New target range | 3.75% – 4.00% |
| Size of hike | +25 bp |
| Vote | 12 – 0 unanimous |
| Last hike before this | 2023 |
| Dots seeing more hikes | 16 of 19 |
| Median year-end 2026 | ≈ 4.1% |
If Wednesday was the flinch, Thursday was the market talking itself off the ledge. With the decision finally behind it, and softer oil plus resilient jobs data easing the worst-case fears, tech ripped: AMD jumped more than 6%, Intel nearly 8%, and the S&P and Nasdaq both reclaimed their 50-day moving averages after briefly slipping below. The fear gauge, the VIX, fell hard to around 15. It was a textbook “sell the rumor, buy the fact” session — the uncertainty of whether the Fed would move was worth more anxiety than the move itself.
Friday then petered out, which is exactly what a triple-witching session — the quarterly expiration of index futures and options — tends to do: heavy, mechanical volume and choppy price action that says little about conviction. The S&P edged up 0.2%, the Dow slipped, and the Nasdaq added 0.4%. Don’t over-read it.
Step back from the week’s zig-zag and the durable shift is clear. The S&P is still only about 2% below its June record and up nearly 12% on the year — this is not a broken market. But the environment underneath it has changed. Officials are now openly describing a world of stickier inflation and faster growth, one where the reflex to cut rates at the first wobble is gone. A 10-year yield at 5% and a funds rate approaching 4% is the new discount rate for every asset, and it will keep pressure on the long-duration growth names even as their businesses hum. The semiconductor index, notably, finished the week slightly higher — a sign investors are separating near-term chip demand from the longer AI-safety debate.
The Fed delivered its first hike in three years, unanimously, and framed it as a direction rather than a one-off — 16 of 19 dots see more to come. Stocks whipsawed but landed near unchanged, masking a real regime change: sticky inflation, faster growth, and a 5% 10-year as the new gravity. The bull market isn’t over; it’s being re-priced. Next week the question shifts from “will they hike” to “how much further — and can earnings outrun the discount rate.”