Market check: Stocks pare gains following Fed rate hike

Yahoo Finance's Julie Hyman examines market and sector reactions to the Fed's 75 basis point rate hike announcement, as well as the U.S. dollar.

Video transcript

SEANA SMITH: Taking a look here at the market-- stocks giving up some of their earlier gains on the heels of this Fed decision. Julie Hyman has a closer look at this for us. Julie.

JULIE HYMAN: Hi, guys. Well, as we always see with these situations, right, it takes a little time for the decision to percolate through the markets, then it's going to take a little time for the commentary to percolate through the markets. And we've already had some percolation in the days running up to this, ever since the "Wall Street Journal" story earlier in the week that 75 basis points was likelier than not.

So some of that already getting priced in. What's new here is the then 175 basis points of additional tightening by the year's end, as Brian Cheung was pointing out to us. So as we see now, the Dow has turned slightly into the negative. You can expect more gyrations, right?

This is not where things stop, to any extent. The S&P 500 is still positive. But as you can see, took a sharp leg lower after the decision came out. And the NASDAQ, similar situation here, although it is much more strongly in the green-- up about 9/10 of 1%.

We got to talk about bonds as well. And a little bit of delay on the bond yields, so let's take a look at prices. And prices here moving around a little bit, but prices still higher so that means we still have yields a little bit lower even as the Fed is raising rates. Again, that's because of the pricing in process that we have been seeing already in the days preceding this one.

We can look at the dollar as another proxy for what's going on here. And here, too, we are seeing a little bit of weakness here in the dollar. And that's as we have traders try to weigh rising rates on the one hand, slowing growth on the other. The dollar has been experiencing, of course, a lot of strength this year.

But it looks like slower growth is definitely a concern here. If the Fed is not only raising rates by 75 basis points now to try to combat inflation, but is planning on continuing to be aggressive with those rate increases in what is already a slowing growth environment, what does that mean for economics? You just heard a 50-50 chance of a recession-- certainly, there are others who put those numbers at far higher.

And then I do want to check on Bitcoin as well, which we've been watching so closely, and which has been seeing a lot of weakness. It is showing even more weakness here-- so much for your inflation hedge. So much for your Bitcoin not being correlated with other risk assets. I don't know, but it's down 9% right now and back below $21,000.

And finally, let's get a check on the sectors as well. In the S&P 500, we've got energy as the worst performing group today. We do have energy prices, oil prices, pulling back. So that's part of what's going on there. Real estate, communication services, consumer discretionary doing the best in today's session. Again, guys, the story is not over. We're going to watch and see all of the movements that now ensue over the next-- until the end of the session and as we hear from the chair.

SEANA SMITH: Next couple of hours-- and, of course, tomorrow following the opening bell. Julie Hyman, thanks so much for coming on here for us.