Market Slump Puts Pressure on Federal Reserve to Raise Interest Rates

Last week saw a notable drop in U.S. stocks, as the Dow Jones Industrial Average (DJIA) fell 3%, its fourth consecutive weekly loss. This was the largest weekly drop in more than five months, and the S&P 500 and Nasdaq Composite indices declined 2.7% and 3.3%, respectively, while the small-cap Russell 2000 index also slumped 2.9%.

In response to the downturn, traders are predicting that the Federal Reserve will raise interest rates by 30 basis points in March, with a 20% possibility of a 50 basis point increase.[0] The market is expecting the Fed to hike by 25 basis points in May and 72% believe a similar hike will come in June.[1]

At the close of the trading week, the Dow was up 0.39%, though it had declined 0.13% for the week overall.[2] The S&P 500 and Nasdaq Composite both dropped 0.28% and 0.58% last week, respectively, with the Nasdaq still up 0.59% for the week.

Overall, the January rally appears to still be in effect, as the S&P 500 is flat for the month-to-date.[3] The bearish sentiment of the past two weeks may signal a shift in the markets, but only time will tell how the rest of the year will pan out.

0. “Dow Jones, Nasdaq, S&P 500 weekly preview: Fed tightening forecasts are inching up By”, 27 Feb. 2023,

1. “Stocks Edge Higher, Nvidia, Moderna, eBay, Wells Fargo In Focus – Five Things To Know” jacksonprogress-argus, 23 Feb. 2023,—five-things-to/article_2193282a-3820-5763-9a15-98740fb980f6.html

2. “CNBC Daily Open: Growth stocks look hot but investors should be cautious” CNBC, 20 Feb. 2023,

3. “Dow Jones, Nasdaq, S&P 500 weekly preview: Stocks are overvalued – analysts By”, 21 Feb. 2023,–analysts-3009072