Stocks rally after Fed sell-off, but caution remains as analysts flag more turbulence ahead

One day after the Federal Reserve surprised exactly no one but still managed to rattle markets, stock futures climbed back on September 17. Dow futures jumped over 1%, the S&P 500 futures rose 1.21%, and Nasdaq futures led the pack at 1.58%. The bounce followed a rough session on September 16, when Chair Kevin Warsh and the Fed unanimously voted to raise the federal funds rate by 25 basis points, pushing the target range to 3.75%-4.00%. It was the first hike since July 2023, and markets didn’t take it well. The sell-off that started it all The Dow Jones Industrial Average shed 631 points on the day of the announcement, a 1.21% decline that brought it to 51,461.90. The S&P 500 fell 0.45% to close at 7,551.81, while the Nasdaq Composite ended the day essentially flat at 25,978.43. What spooked investors wasn’t necessarily the hike itself, which had been widely telegraphed. It was the dot plot. The Fed’s quarterly projections showed 16 out of 18 officials expect at least one more rate increase before the year is out. The median year-end rate projection sits at 4.1%. Warsh himself described inflation as “too high and has been for too long.” The rate increase marks a stark rever...