US stocks close lower as Fed keeps interest rates unchanged, but hints at a rate hike this year

At the first FOMC meeting chaired by Kevin Warsh, the committee kept interest rates unchanged at 3.5%–3.75%. However, the Feds updated dot plot turned more hawkish, with policymakers now expecting higher rates in 2026. The median year-end rate forecast rose to 3.8% from 3.4% in March, signaling the possibility of at least one rate hike next year.

The market reacted negatively to the Feds stance. The Dow Jones fell nearly 1%, the S&P 500 dropped 1.2%, and the Nasdaq lost 1.3%, while the two-year Treasury yield jumped to 4.22%.

However, stock futures moved higher on Thursday despite the sharp selloff following the Federal Reserve‘s meeting. S&P 500 futures gained 0.8%, Nasdaq 100 futures rose 1%, and Dow futures added more than 280 points as investors reassessed the Fed’s outlook.

In Asia, markets were mixed but several major indices reached record highs. South Korea‘s Kospi surged above the 9,000 level for the first time, supported by gains in SK Hynix and Samsung Electronics, while Japan’s Nikkei 225 climbed above 71,000 for the first time. Meanwhile, Hong Kong‘s Hang Seng declined and China’s CSI 300 was largely unchanged.

Crude oil prices continued to decline on Thursday, with WTI crude falling to a three-month low of $73.40 per barrel and heading for a weekly loss of more than 10%. The selloff was driven primarily by optimism surrounding a newly signed peace agreement between the United States and Iran and expectations that the Strait of Hormuz will reopen, easing concerns about disruptions to global oil supplies.

Despite bullish supply data, the oil market largely ignored a significant decline in U.S. crude inventories. The EIA reported that stockpiles fell by 8.26 million barrels last week almost double market expectations and marked the tenth consecutive weekly decline, leaving inventories at their lowest levels in over 40 years. However, traders focused instead on the prospect of increased Iranian oil exports and reduced geopolitical risks, which outweighed concerns about tightening global supplies.