The Fed Raises Rates for the First Time Since 2023
The Federal Reserve raised interest rates last week for the first time since 2023, and long-term Treasury yields climbed to levels not seen in nearly two decades. Stocks were mixed.
| Week ending Sept. 18 | Weekly change |
|---|---|
| S&P 500 | −0.1% |
| Dow Jones Industrial Average | −1.7% |
| Nasdaq Composite | +0.7% |
| 10-year Treasury yield | Near 5%, a 19-year high |
| Fed funds target range | 3.75%–4.00% (up 0.25%) |
What happened
- The Fed hiked. The committee voted unanimously to raise its target range by a quarter point, to 3.75%–4.00%, citing inflation that "remains elevated" while describing economic activity as expanding at a solid pace. Most officials projected at least one more increase before year-end.
- Bond yields rose. The 10-year Treasury yield hovered near 5%, its highest level in about 19 years. Rate-sensitive sectors lagged: utilities fell about 3%, while health care gained about 1.8%. Eight of 11 S&P 500 sectors ended lower.
- The economy stayed firm. August retail sales rose 1.2%, above expectations, and initial jobless claims fell to 196,000, one of the lowest readings in decades.
- Energy stayed in focus. Oil eased back below $100 a barrel late in the week as Middle East supply concerns moderated.
What it means for business owners
- Borrowing costs are rising again. If you use a variable-rate line of credit or plan to finance equipment or real estate, review terms now rather than later.
- Cash earns more. Higher short-term rates generally lift yields on business savings and money market funds.
What it means for retirement plan participants
- Rising yields push existing bond prices down in the short run, but they also mean new bond purchases, including inside target-date funds, earn higher income going forward.
- Weeks like this are a reminder of why diversified, age-appropriate allocations exist. For long-term savers, continuing regular payroll contributions matters more than any single Fed meeting.
The week ahead
Purchasing managers' surveys (Wednesday), new home sales (Thursday) and durable goods orders (Friday), plus a scheduled meeting between Presidents Trump and Xi on Thursday.
Questions about your plan or portfolio?
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Contact Pleasanton WealthMarket data from public sources believed reliable, as of the week noted. Indexes are unmanaged and cannot be invested in directly. Past performance does not guarantee future results. This commentary reflects the author's opinions as of the date of publication, which may change without notice, and is general information only — not a recommendation to buy or sell any security or individualized investment, tax or legal advice.