All three major US stock indexes fell more than 1%

According to reports, the Federal Reserve announced a 25 basis point hike in interest rates, causing intraday volatility in US stocks. The late afternoon plunge led to a collective decline, with the Dow down 1.63%, the Nasdaq down 1.6%, the S&P 500 down 1.65%, most large tech stocks down, Tesla down more than 3%, and Google, Amazon, and Meta Platforms all down more than 1%;

Interpretation of this information:

On June 16, 2021, the Federal Reserve declared an increase in interest rates by 25 basis points, leading to a stir in the United States stock market. The announcement resulted in intraday volatility, with the stocks plummeting in the late afternoon hours. As a result, there was an overall decline in the world’s top stock markets, with the Dow, Nasdaq, and S&P 500 down by 1.63%, 1.6%, and 1.65%, respectively. Furthermore, notable tech giants such as Tesla, Google, Amazon, and Meta Platforms faced an approximate dip of over 1% in their shares.

The rise in interest rates is of tremendous significance to the investors as it can impact the cost of borrowing and lending, as well as the economy’s overall functionality. With the interest rate hike, the value of bonds and other fixed-income investments tends to rise, which in turn lowers the worth of stocks. Consequently, investors withdraw their capital from a risky project and invest it in bonds, leading to the stock market’s bearish sentiment.

Tesla, one of the world’s leading electric vehicle manufacturer and Google, a tech giant, shared their stock market’s dip. Tesla experienced a drop of more than 3%, leading to monetary damage to its investors. Earlier in the day, the company had also declared that it would invest more than $1 billion in Bitcoin in the future. The investment was speculated as Tesla’s way of diversifying its portfolio and getting ahead of its competitors in the market race. However, the company’s shares witnessed an immediate decline despite the crypto investment.

Similarly, Google, Amazon, and Meta Platforms (formerly known as Facebook) also faced the adverse effects of the interest rate hike. Google suffered a dip of over 1%, with Amazon facing a 1.5% drop in its shares. Likewise, Meta Platforms’ shares plunged by more than 1%, forcing the company to reevaluate the stocks and attract investors’ interest.

In conclusion, the Federal Reserve’s decision to increase interest rates by 25 basis points has a severe impact on the stock markets worldwide, leading to an overall decline in the stocks’ value in a single day’s trading window. The dip had a detrimental effect on giants of the tech, electric cars, and social media industry. Investors need to be aware of such market changes and devise a hedging strategy to mitigate their losses.