By The Epoch Times | Created at 2026-09-19 03:10:15 | Updated at 2026-09-19 10:35:50
7 hours ago
Wall Street closed a volatile, mixed week, as investors weighed the Federal Reserve’s first interest-rate increase in three years against a supply-driven spike in oil prices, a bond-market selloff, and a fresh debate over the risks of artificial intelligence.
The Dow Jones Industrial Average fell 1.69 percent for the week, closing at 51,681 on Friday. The S&P 500 ended nearly flat at 7,650. The Nasdaq Composite rose 0.72 percent, buoyed by a late-week rebound in semiconductor shares, while the small-cap Russell 2000—among the most sensitive to interest rates—fell 1.50 percent, the week’s worst performer.
The CBOE Volatility Index dropped 6.5 percent to 14.81, signaling a renewed sense of calm.
Defining Event
The week’s defining event came Wednesday, when the Federal Reserve unanimously raised the federal funds rate by 25 basis points to a target range of 3.75–4 percent—the first increase in three years—in line with market expectations.
“The Fed is reacting to prevent the economy from overheating. Policymakers see inflationary pressure amid strong growth and falling unemployment,” David Russell, global head of market strategy at TradeStation, told The Epoch Times.
He expects the central bank’s rate hike to reassure stock and bond investors who are worried that inflation could run out of control and push longer-term yields higher.
“The Fed is walking the line between complacency and extreme hawkishness, giving them the flexibility to adapt to changing conditions in global energy markets,” he said.
Officials signaled the hike would not be the last, as 16 of 18 Federal Open Market Committee participants expect at least one more increase this year, while Chair Kevin Warsh did not submit a projection.
“Another hike is now the base case, with a further move possible if inflation remains stubborn,” Lale Akoner, eToro global market strategist, told The Epoch Times.
Equities initially rallied on the decision, as investors read it as a sign the central bank was serious about bringing inflation under control. But bond traders weren’t convinced a single hike of this magnitude would relieve pressure on the long end of the yield curve.
After falling earlier, the 10-year Treasury yield climbed back above 5 percent in the final hour of trading Wednesday, and stocks surrendered their gains to close in the red—the Dow falling 1.21 percent, its worst day of the week, compounded by a decline in financial shares and a drop in Boeing after the company warned of further 737 production delays.
Sentiment turned by Thursday, as investors had more time to digest the Federal Reserve’s resolve.
“While stocks don’t like higher rates, market participants are applauding Wednesday’s hike from a Fed credibility perspective, as Chair Warsh has spoken hawkishly in recent months about inflation and investors have been looking for more action from the Fed on inflation,” Alex Guiliano, chief investment officer at Ridgewood, New Jersey-based Resonate Wealth Partners, told The Epoch Times.
Bond yields eased across the curve on Thursday, with the 30-year closing at 5.29 percent and the 10-year at 4.93 percent, comfortably below the psychological 5 percent threshold.
Lower bond yields cleared the way for a broad rally led by semiconductors, with the iShares Semiconductor ETF gaining 3.39 percent and the Nasdaq and S&P 500 climbing 1.69 percent and 1.23 percent, respectively.
“Now that we are past this rate hike, stocks can move on, as uncertainty has faded. Stocks have the clarity needed from the Federal Reserve to resume their rally as the market’s wall of worry continues,” Bob Edwards, chief investment officer at Naples, Florida-based Edwards Asset Management, told The Epoch Times.
Oil Shock and Bond Selloff
The rate decision came at a time of growing market anxiety led by a sharp rise in oil prices and bond yields earlier in the week, after Saudi Arabia canceled some shipments following drone attacks that disrupted its export pipeline. Brent crude touched a four-month high of $110 a barrel on Monday before climbing above $108 again on Tuesday.
A television displays news of the U.S. Federal Reserve's interest rate hike as traders work on the floor of the New York Stock Exchange (NYSE) on Sept. 16, 2026. Timothy A. Clary/AFP via Getty Images
The 10-Year U.S. Treasury yield crossed the psychological 5 percent mark on Monday before closing slightly above it on Tuesday for the first time since July 2007—a level that weighed heavily on equities through the middle of the week.
“The rise in bond yields globally suggests that vigilantes are not all that pleased with how politicians are crafting fiscal policy, and these investors are selling government bonds, which is pushing yields up,” Carol Schleif, chief market strategist at Minneapolis-based BMO Wealth Management, told The Epoch Times.
Schleif expects these elevated yields could be here to stay for some time, especially with geopolitical concerns and elevated energy prices continuing to remain front and center.
The pressure began to ease on Wednesday, when reports emerged that Saudi Arabia would restore roughly half the capacity of its East-West pipeline within days and reach full operation within six weeks. Brent crude fell back toward $104, and the 10-year yield dipped toward 4.94 percent, fueling the rally in rate-sensitive sectors such as small caps and semiconductors.
Sector Fallout
The oil-and-yield shock hit specific sectors hardest. Big banks were among Monday’s biggest losers, after pessimistic remarks about the sector from Bank of America’s CEO Brian Moynihan.
During the Barclays Global Financial Services Conference on that day, Moynihan warned that investment-banking fees would fall at least 10 percent in the third quarter and trading revenue would be roughly flat.
The Charlotte, North Carolina-based bank fell 5.14 percent, JPMorgan dropped 1.70 percent, and Wells Fargo declined 1.75 percent.
Restaurant stocks, exposed to higher fuel and input costs, sold off sharply on Tuesday as energy shares rallied on crude’s climb. Darden Restaurants closed 4.32 percent lower, CAVA Group fell 8.93 percent, and Shake Shack dropped 8.25 percent.
Semiconductor stocks proved the week’s most resilient group, recovering from a weak Monday open driven by the previous weekend’s headlines on the risks of AI—which had pulled the Nasdaq down more than 1 percent intraday before it clawed back to close 0.56 percent lower.
Nvidia and AMD shares rose 0.57 percent and 2.19 percent on Tuesday even as software names such as Microsoft and Salesforce gave back some of Monday’s gains, falling 1.64 percent and 1.46 percent.
Retail Sales Surprise
August retail sales, released on Wednesday, rose 1.2 percent from the prior month, following a revised 0.5 percent decline in July. The reading was the strongest in five months and came in well ahead of forecasts for a 0.8 percent gain, helping retail stocks rebound from Tuesday’s selloff.
People walk past an Amazon Go store in a Manhattan mall in New York City. Spencer Platt/Getty Images
Quadruple Witching
Stocks searched for direction into Friday’s quadruple witching session—the simultaneous expiration of single stock futures contracts, stock index futures, index options futures, and single stock options—amid profit-taking from Thursday’s rally, rising bond yields and a Bank of Japan rate hike that nonetheless failed to lift the yen against the dollar.
“Friday’s quadruple witching is known to bring volatility to markets, and that could be exacerbated this time around given the digestion period after Wednesday’s Federal Reserve rate hike and with the seasonal volatility that typically arises during [September],” Rick Gardner, chief investment officer at Raleigh, North Carolina-based RGA Investments, told The Epoch Times.
The S&P 500 and Nasdaq closed 0.17 percent and 0.39 percent higher, respectively, while the Dow and Russell 2000 slipped 0.16 percent and 0.50 percent, respectively.
“The stock market has held up very well so far in September, with the markets down marginally so far during the month,” Gardner said.
He said that markets remain cautious amid rising oil prices and bond yields. “We are not out of the woods when it comes to the volatility that typically arises during September and October.”
Looking ahead, Gardner pointed to the Sept. 30 core PCE inflation report as the market’s next major catalyst. “It has taken on extra importance now that the Fed just raised interest rates and made it clear that they’re squarely focused on the inflation side of their dual mandate,” he said.
