Oil price below $70 after Fed rate hike, all indices fall

The Federal Reserve on Wednesday hiked key interest rates by 0.5% point, trying to fight the impending recession, but leading to a market crash. 

All three major indices, Dow Jones, S&P 500 and Nasdaq Composite retreated, with the S&P 500 finishing down 0.7%.

This is the Fed’s 10th consecutive increase since March 2022. Interest rates are above 5% for the first time since 2007.

Oil prices and shares fall
Oil prices fell over 1%. US crude came below $70.

Brent futures fell 76 cents, or 1.1%, to $71.57 a barrel. West Texas Intermediate crude (WTI) fell $1, or 1.5%, to $67.60 a barrel. WTI in early trading on Thursday fell to a session low of $63.64 a barrel, the lowest since December 2021.

Both Brent and WTI have fallen over 10% since the start of this week.

Impact on you
Higher Fed interest rates make loans expensive for both businesses and consumers.

Commercial banks charge each other for short-term loans. A higher rate means expensive borrowing costs, which can reduce demand among banks to borrow money.

Mortgage loans would cost more; buying a  house will remain a dream. The interest rate impacts the stock and bond markets, credit cards, personal loans, student loans, auto loans and business loans.

The interest rates charged by credit card companies tend to move in lockstep with the federal funds rate.

If you are close to retirement, the situation needs to be handled with care. The right asset allocation among stocks, bonds and cash is the best way to reduce the impact.