Federal Reserve Raises Key Interest Rate; Dow Falls 500 Points -- WSJ

The Federal Reserve raised rates by 0.25 percentage point today, its first interest-rate rise since 2023-a move that sent stock and bond prices lower and could spark tensions between Chairman Kevin Warsh and President Trump.

Stocks turned lower and bond yields higher after Warsh began his press conference at 2:30 p.m. The S&P 500 was down 0.3% after paring earlier gains. The Dow industrials were off 0.9%, about 500 points. The Nasdaq clinged to gains, up less than 0.1%

"Inflation is too high and has been for too long," Warsh said in his opening remarks. "Our decision comes at a time when the American economy appears to be strengthening."

The 10-year yield rose back to 5% after being down around 4.95% before the Fed decision. Brent crude futures slipped below $106 a barrel.

The stage had been set for the Fed to raise rates by a widening conflict in the Middle East that has pushed up oil prices and boosted inflation expectations.

Inflation has been running above the central bank's 2% target for more than five years. Some Fed officials have been arguing since April that it's time to raise interest rates to address that.

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(END) Dow Jones Newswires

September 16, 2026 15:03 ET (19:03 GMT)