Markets got crushed Thursday as investors continued to digest the latest policy decisions of the Federal Reserve.
What happened
The broader markets struggled Thursday, with the Dow Jones Industrial Average closing Thursday’s session down by 1,069 points, and the Nasdaq Composite was down roughly 5%. Large banks and mortgage originators were not spared.
At the close of trading, shares of Bank of America (BAC -2.80%) were down by 2.7%, and Wells Fargo (WFC -2.65%) shares were off by 2%. Shares of Rocket Companies (RKT -9.22%) were down 9.1%.
So what
Investors are clearly reacting to the Federal Reserve’s decision Wednesday to raise its benchmark overnight lending rate, the federal funds rate, by 0.5 percentage points. That was expected, but it was larger than the Fed’s normal 0.25 percentage point hikes. Federal Reserve Chairman Jerome Powell did, however, say that the Fed is not currently considering implementing 0.75 percentage point rate hikes in the future. Some investors had been worried about that possibility. The Fed also said that it plans to start reducing its massive balance sheet, which effectively means pulling liquidity out of the economy. The Fed will ramp up to running $95 billion worth of bonds per month off its balance sheet by September.
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