# Fed hikes rates as stocks sink and bond yields surge

> The Federal Reserve raised rates for the first time in three years, sending the Dow down 600 points and pushing the 10-year yield above 5%.
- Title: Fed hikes rates as stocks sink and bond yields surge
- Summary: The Federal Reserve raised rates for the first time in three years, sending the Dow down 600 points and pushing the 10-year yield above 5%. The Fed's first…
- Keywords: federal reserve, interest rates, kevin warsh, dow jones, s&p 500, nasdaq, bond yields, inflation, fomc, stock market, treasury bonds, rate hike
- Source: Yahoo Finance — https://finance.yahoo.com/markets/live/stock-market-today-wednesday-september-16-dow-sp-500-nasdaq-fed-meeting-decision-080356525.html
- Author: Grace O'Donnell
- Published: 2026-09-16T20:06:01+00:00
- Read time: 2 min
- Topics: federal reserve, interest rates, kevin warsh, dow jones, s&p 500, nasdaq, bond yields, inflation, fomc, stock market, treasury bonds, rate hike
## Fed hikes rates, stocks tumble
The Federal Reserve raised rates by 25 basis points to 3.75%-4%. The Dow fell 600 points while the S&P 500 dropped 0.4%.
## Bond yields top 5%
The 10-year Treasury yield rose above 5%, reaching its highest level since the 2007 financial crisis.
## More rate hikes coming
The Fed's projections showed officials expect at least one more rate hike in 2026. The decision was unanimous.
## Oil prices stay elevated
Benchmark Brent and WTI crude futures remained above $100 per barrel, fueling worries about persistent inflation.
## Retail sales beat expectations
August retail sales rose 1.2%, topping the 0.9% forecast. Consumers kept spending despite inflation pressures.
## Warsh focuses on inflation fight
Fed Chair Kevin Warsh said inflation remains the central bank's main concern, calling it "too high and has been for too long."

> The plain fact is that inflation is too high and has been for too long.
## Warsh dodges Trump questions
Warsh refused to comment on Fed independence or President Trump's calls for lower rates, saying "We stay in our lane."

> We stay in our lane. We'll let people that do trade policy and fiscal policy stay in their lane too.
## Rate hikes help poorest Americans
Warsh argued that price stability benefits workers without assets, allowing them to "put their head above water" with real wage gains.
## Markets initially rallied, then sank
Stocks rose briefly after the rate decision, but reversed sharply during Warsh's press conference as traders saw hawkish signals.
## SpaceX stock jumps on launch
SpaceX shares popped 5% after announcing its first orbital Starship launch for September 22, trading at $151.
## AI infrastructure trade stays hot
Bank of America says AI infrastructure investments remain strong, with memory, power, and interconnectivity creating supply bottlenecks.
## Chip stocks rebound on deal
SK Hynix and Intel shares rose on reports the Korean chipmaker is exploring a deal to produce memory wafers in the US.
## US oil output hits records
American crude and natural gas production are both set to reach all-time highs as producers capitalize on global supply shortages.
## Software stocks outpace chips
The software ETF is up 15% over three months while the semiconductor ETF fell 17%, as investors rotate back to software.

> One of the things that was greatly overstated earlier this year was the death of software.
## Rate hikes create buying opportunities
Historically, the S&P 500 drops 4% after the first Fed hike, then recovers and gains 9% on average over 12 months.

> Fed rate hikes have historically been great buying opportunities.
## Crypto tumbles on failed vote
Bitcoin fell below $76,000 after the Senate voted 49-50 to block the Clarity Act, stalling crypto regulation progress.
## Key takeaway

The Fed's first rate hike in three years signals a renewed focus on fighting inflation, even as stocks fall and bond yields hit levels not seen since 2007.