The U.S. Federal Reserve's decision to raise interest rates for the first time in over three years and its indication of potential further increases have raised concerns about increased volatility in the domestic stock market. Following a decline in the New York stock market, rising U.S. Treasury yields and a stronger dollar are expected to weigh on investor sentiment.
On September 16, the Dow Jones Industrial Average closed down 631.21 points (1.21%) at 51,461.90 on the New York Stock Exchange. The S&P 500 fell 33.92 points (0.45%) to finish at 7,551.81, while the tech-heavy Nasdaq Composite dropped 3.15 points (0.01%) to close at 25,978.43.
Initially, the New York market showed gains, but it reversed course following the Fed's interest rate decision. The Federal Open Market Committee (FOMC) raised the benchmark interest rate by 0.25 percentage points to a range of 3.75% to 4.00%, marking the first increase since July 2023.
All 12 FOMC members unanimously supported the rate hike. With the Fed leaving the door open for additional rate increases this year, market participants are increasingly cautious about the potential for further tightening.
U.S. Treasury yields also rose, with the benchmark 10-year Treasury yield surpassing 5% during trading. The dollar strengthened, with the Dollar Index (DXY), which measures the dollar against six major currencies, rising 0.6% to 100.21.
International oil prices fell after a recent surge, as news of Saudi Arabia's diversion of oil supplies led to a partial reversal of gains. October futures for West Texas Intermediate (WTI) crude oil settled at $102.43 per barrel, down 3.21% from the previous trading day.
According to Seo Sang-young, a researcher at Mirae Asset Securities, "As Fed Chair Kevin Warsh continued to emphasize inflation, his somewhat hawkish remarks led to a strengthening of the dollar and a rise in interest rates, causing the indices to turn downward."
Attention is now focused on whether the potential for further tightening by the Fed will impact investor sentiment in the domestic market. As of 8:17 a.m. on September 16, shares of Samsung Electronics were up 0.39% compared to the previous trading day. In contrast, SK Hynix fell 0.06%, SK Square dropped 0.20%, Samsung Electro-Mechanics declined 0.51%, and LG Energy Solution decreased by 0.27%.
Han Ji-young, a researcher at Kiwoom Securities, stated, "We should prepare for the possibility of an additional rate hike this year, as the domestic market is likely to experience increased volatility while digesting the hawkish signals from the September FOMC."
* This article has been translated by AI.
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