The Federal Reserve raised interest rates by 25 basis points to a target range of 3.75% to 4.00% on Wednesday, the first hike since 2023, with a unanimous 12-0 vote signaling one more increase expected this year. Stock markets fell following the announcement, with the Dow Jones dropping more than 600 points while bond yields climbed, with the 10-year U.S. Treasury yield returning above 5%. Despite the rate environment, investors remain constructive on equities, citing economic resilience, strong corporate earnings, and the historical pattern of market resilience following initial Fed rate hikes.
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