Federal Reserve Meeting Triggers Selloff in Stocks as Bank Shares Plummet
On Tuesday, the US stock market suffered a decline as investors awaited the outcome of the Federal Reserve's two-day meeting to determine its stance on interest rates. The S&P 500 and Dow Jones Industrial Average both fell by over 1%, while the Nasdaq Composite dropped nearly 1%. Government bond yields plummeted following the Labor Department's announcement that the labor market is slowing down. The US dollar index continued rising for the fourth consecutive day. The bank shares declined significantly, with First Republic Bank becoming the third American bank failure since March. Analysts predict that the Federal Reserve will raise interest rates by a quarter point, with some speculating that June may also see a rate hike. Investors are paying close attention to the central bank's forward guidance hints. Additionally, Treasury Secretary Janet Yellen warned Congress that if the debt limit isn't raised, the government could run out of funds to pay bills by early June.