Nasdaq Plunges 354 Points as Fed Signals Rate Hike, Tech Stocks Sink 1.34%

Mumbai, June 18: The Nasdaq Composite index closed sharply lower at 26,021.66, down 354.69 points or 1.34%, as investors reacted to hawkish signals from the Federal Reserve’s first policy meeting under new Chairman Kevin Warsh. The sell-off erased early session gains, with the index touching an intraday low of 25,960.41 after opening at 26,493.82. 

The broader market weakness extended across major indices, with the S&P 500 falling 91.25 points to 7,420.10, a decline of 1.21%, while the Dow Jones Industrial Average dropped 507.12 points to close at 51,492.55, down 0.98%.  

Trading volume on the Nasdaq reached 10.17 billion shares, exceeding the average volume of 9.38 billion, indicating heightened market participation amid the policy-driven sell-off. 

Fed Holds Rates at 3.5%-3.75% but Nine Officials Signal 2026 Hike 

The Federal Open Market Committee concluded its two-day meeting on Wednesday, unanimously deciding to maintain the federal funds rate target range at 3.50% to 3.75%. However, the policy statement and updated economic projections revealed a significant shift in the committee’s outlook, with nine of 18 officials indicating that at least one rate hike would be necessary in 2026. 

The median estimate for the year-end federal funds rate now stands at 3.8%, up from 3.4% in the March projections. Among the hawkish camp, six officials advocated for multiple rate increases this year, reflecting growing concerns over persistent inflationary pressures. The Fed’s statement acknowledged that inflation “remains elevated relative to the Committee’s 2% goal,” partly due to supply shocks that have driven price increases in energy and other sectors. 

Chairman Kevin Warsh, in his first press conference since being appointed by President Donald Trump, delivered a notably hawkish message, emphasising the central bank’s commitment to “price stability.” Warsh also announced the elimination of forward guidance, stating, “I can’t give you any guidance on what we’re going to do next,” marking a departure from the Fed’s previous communication strategy. 

Treasury Yields Surge as Bond Market Aligns with Hawkish Fed Projections 

The policy announcement triggered a sharp rally in Treasury yields, with the two-year yield jumping 15 basis points to 4.205% and the 10-year yield climbing 6.9 basis points to 4.497%.  

The move reflected growing market conviction that the Federal Reserve’s policy stance has turned decisively hawkish, aligning with bond market expectations that had already priced in at least one rate hike.  

Economists noted that the reaction was largely driven by the dot plot’s hawkish tilt and changing inflation expectations, while market participants interpreted policymakers’ remarks as signalling a departure from the easy-money approach many had anticipated.  

Meanwhile, the Cboe Volatility Index, often referred to as Wall Street’s fear gauge, rose 12% during the session, reflecting increased investor anxiety over the policy outlook. 

Also Read: How to Invest in the US Stocks From India?

SpaceX Shares Tumble 5% as Post-IPO Rally Cools on Float Concerns 

Space Exploration Technologies Corp declined 4.95% to $191.82, marking the first drop since its blockbuster initial public offering on Friday. The stock had surged nearly 58% above its $135 IPO price during the initial rally, briefly surpassing Microsoft and Amazon in market capitalisation on Tuesday.  

The reversal came despite continued strong retail demand, with Vanda Research reporting that individual investors had purchased $369.8 million of SpaceX stock over the first three trading sessions. According to the Retail Trading Activity Tracker, retail flow for SPCX showed a BUY +5 sentiment, while Micron recorded a SELL -3 and Tesla a SELL -4 sentiment.  

However, the stock’s limited free float of approximately 4.2% of total shares had amplified the upward moves, leaving the stock vulnerable to profit-taking. Options market activity suggested cooling sentiment, with put contracts representing 44% of flow by Tuesday’s close. 

Nasdaq Sell-Off: Megacap Tech and Communication Services Lead Broad Declines 

The technology sector bore the brunt of Wednesday’s sell-off, with megacap names posting substantial losses amid concerns that higher interest rates would pressure growth stock valuations. Meta Platforms tumbled 5.47% to $567.58, while Microsoft fell 3.82% to $378.91 and Amazon declined 3.46% to $237.50. Alphabet dropped 2.57% to close at $237.50, and Apple shed 1.15% to $296.06. The weakness extended across the technology spectrum, with Shopify declining 4.54% to $108.09, Adobe plunging 5.32% to $196.28, and Strategy (formerly MicroStrategy) falling 5.09% to $116.56. 

The communication services sector was the worst performer among Nasdaq sectors, led lower by weakness in social media and entertainment names. Charter Communications fell 6.90% to $132.00, while Comcast declined 4.10% to $22.69. AppLovin emerged as the top decliner on the Nasdaq, plunging 6.93% to $479.49. Meanwhile, the Nasdaq Telecommunications index (IXTC) dropped sharply by 3.69% to 637.27, while the Nasdaq Biotechnology index (NBI) showed resilience, advancing 1.10% to 6,018.75. 

Chip Equipment Makers Surge as Citi, Barclays Raise AI-Driven Targets 

Despite the broader market weakness, semiconductor equipment manufacturers posted substantial gains after multiple brokerages raised price targets, citing robust artificial intelligence-driven capital spending by hyperscalers. Applied Materials surged 4.35% to $592.92, Lam Research gained 1.31% to $374.18, and KLA Corporation advanced 0.59% to $244.02. 

Analysts raised their price targets for Applied Materials, Lam Research, and KLA while reaffirming positive ratings, citing sustained artificial intelligence-related spending by major technology companies as the primary catalyst. Estimates suggest the wafer fabrication equipment market could reach approximately $145 billion this year, rising to $200 billion in 2027 and $250 billion in 2028.  

Additional target increases for the three companies reflected continued confidence in semiconductor equipment demand. Meanwhile, Micron Technology added 2.20% to $1,043.19, Intel rose 3.46% to $121.10, and Advanced Micro Devices gained 0.95%. 

S&P 500 Drops 1.21% as Carvana, EchoStar Lead Broad-Based Declines 

The S&P 500 fell below its 20-day moving average of 7,478.64 but remained above its 50-day (7,285.25) and 200-day (6,892.42) moving averages, indicating that the broader bullish trend remains intact despite near-term weakness.  

Key support is seen near the Ichimoku Kijun level at 7,429.38, while 7,478.64 now acts as immediate resistance. Among decliners, Carvana dropped 10.25% to $62.86, EchoStar fell 7.66% to $111.70, Equifax lost 7.35% to $154.84, and Nasdaq Inc slid 6.72% to $83.29.  

Other notable losers included Gartner (-6.09%), Estée Lauder (-5.85%), Accenture (-5.75%), Old Dominion Freight Line (-5.73%), and Meta Platforms (-5.44%).  

On the upside, Moderna surged 11.55% to $61.80, Robinhood Markets gained 8.78% to $105.20, GE Vernova advanced 6.77% to $1,048.86, Vertiv Holdings rose 6.00% to $317.58, and Western Digital climbed 4.56% to $712.13. Dell Technologies added 3.77%, while RTX gained 3.11% to $192.58. 

Analysts warned that weak momentum and fading trend strength could raise correction risks if the index falls below 7,323.68. However, improved dividend outlooks and corporate actions supported the broader bullish view. The technical picture remained mixed, with the Average Directional Index at 18.93 indicating limited trend strength and potential range-bound trading. 

Dow Jones Slides 507 Points as Salesforce, Microsoft Weigh on Blue-Chip Index 

The Dow Jones Industrial Average touched a record intraday high of 52,281.19 before reversing sharply to close down 507.12 points at 51,492.55.  

The decline was driven by losses in technology and consumer discretionary stocks, with Salesforce falling 4.14% to $155.02, Microsoft dropping 3.79% to $378.91, Amazon losing 3.45% to $237.50, and IBM slipping 3.12% to $262.35.  

On the upside, Caterpillar gained 1.11% to $955.92, Goldman Sachs rose 0.78% to $1,099.14, and JPMorgan Chase advanced 0.70% to $333.46, reaching a new 52-week intraday high. Market breadth was weak, with only five Dow components advancing against 27 decliners, underscoring broad-based selling pressure. 

Also Read: Understanding US Stock Market Timings

Broader Market Action: Penny Stocks Surge, JPMorgan Hits High, BMW Slumps 

Broader market action was dominated by speculative and micro-cap stocks, with ICCM surging 200.47%, SNBR jumping 120.84%, EHGO rallying 118.94%, and SDOT advancing 98.15%. Other strong performers included YMAT (+94.30%), SVAQW (+79.73%), and QURE (+78.44%).  

Nvidia remained the most valuable U.S. company with a market capitalisation of $4,996 billion, followed by Apple at $4,475 billion, Microsoft at $2,817 billion, and Amazon at $2,498 billion.  

In Europe, BMW shares fell nearly 7% to a five-year low after lowering its 2026 profit outlook, while analysts viewed Snap’s new $2,195 augmented reality glasses as having limited near-term revenue potential. 

Economic Data Shows Resilient Consumer Spending, Pending Home Sales Surge 

Positive economic data released ahead of the Fed decision failed to halt the market’s decline, as stronger consumer spending and housing activity reinforced concerns about persistent inflation. Retail sales rose 0.9% in May, surpassing expectations of a 0.5% increase, led by gains in gas station receipts (+3.4%), miscellaneous retail (+2.3%), online stores (+1.5%), and motor vehicle parts and dealers (+1.2%).  

Pending home sales climbed 3.8%, well above forecasts for a 1% rise, while annual sales growth reached 4.8%. Meanwhile, crude oil prices extended losses for a fifth straight session, with Brent crude falling $1.30 per barrel and U.S. crude slipping below $75 amid hopes of a U.S.-Iran agreement to reopen 

Wednesday’s session revealed a market grappling with a hawkish Fed pivot amid resilient economic data and geopolitical oil uncertainty. Semiconductor strength contrasted sharply with broad tech weakness as Treasury yields surged. With forward guidance eliminated and the Iran deal timeline uncertain, range-bound trading with elevated volatility is expected in the near term. 

Source 

• https://www.nasdaq.com/