Closing Bell: Markets Fall After Fed Interest Rate Pause, Hike Hints for 2026

Markets turned lower in a sharp reversal Wednesday after the Federal Reserve Open Market Committee unanimously held the Fed funds rate in the target range of 3.50% to 3.75% with indications that rates could rise this year. 

The Dow Jones Industrial Average ($DJI) pulled back after reaching new highs, closing the session 0.98% lower at 51,492.55. The tech-heavy Nasdaq-100 (NDX) closed the day 0.99% lower at 29,670.95, and the S&P 500 (SPX) saw the weakest performance after selling off 1.21% to 7,420.10. However, the PHLX Semiconductor Sector Index (SOX) rose 1.38%, exhibiting the resilience of the AI-tech trade. 

The interest rate decision and subsequent press conference ignited the CBOE Market Volatility Index (VIX), which spiked more than 12% to 18.44. 

While members of the FOMC unanimously voted to pause interest rates for June, half of members penciled in an interest rate hike before the end of 2026. In his first press conference, new Fed Chair Kevin Warsh announced five task forces to address areas including Fed communications, data, and ways of modernizing monetary policy in line with efficient markets.  

In talking about the Fed’s dual mandate, Warsh focused less on labor and more on price stability as households grapple with higher inflation brought on by the oil price spike during the U.S.-Iran war. U.S. benchmark crude was flat Wednesday at more than $75 per barrel. The U.S. released Iran-agreement language yet to be signed, but President Donald Trump in his own press conference from the G7 summit in France warned that the US could resume bombings if talks with Iran collapse. 

From Wednesday market action, more on technology stock moves:  

Intel Rallies as 18A-P Enters Risk Production Phase 

NVIDIA (NVDA) and Intel (INTC) dominated S&P trading volume, though it was Intel shares that moved ahead, up 3.46%, after announcing its 18A-P semiconductor node entered the risk production phase of development. It is another sign that the legacy tech firm’s focus on expanding AI manufacturing capabilities is continuing. 

Investors have rewarded Intel stock, which is up 228% rally since the start of 2026.  

Potential in AI Picks and Shovels: Chip Manufacturers Surge on Bullish Citi Note  

In the AI race, Citigroup sees more room to run in the companies that help develop equipment needed to assemble semiconductors. The firm is bullish on NAND equipment demand lasting through 2028 due to what it calls a “widening gap” between that demand and available DRAM.  

Citi raised its price targets on Applied Materials Inc. (AMAT) to $710 from $550, KLA Corp. (KLAC) to $290 from $206.40, and Lam Research Corp. (LRCX) to $450 from $315. Citi has a Buy rating on all three stocks. Applied Materials and Lam Research also hit all-time highs in Wednesday’s trading session.  

Justin Yavorski contributed to this article 

Economic Events for Thursday (ET) 

• 08:30AM: Jobless Claims (Week of June 13) 
• 08:30AM: Philadelphia Fed Manufacturing Index (June) 
• 10:30AM: EIA Natural Gas Report (Week of June 12) 
• 02:00PM: Quadruple Witching  

Earnings Calendar  

• Premarket (Thursday): Accenture Ltd. (ACN), Kroger Co. (KR) 

Postmarket (Thursday): None

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