US stocks capped a rebound Thursday, with the S&P 500 up 1.14% to 7,637.76,…

US stocks capped a rebound Thursday, with the S&P 500 up 1.14% to 7,637.76, the Dow up 0.61% to 51,778.04, and the Nasdaq up 1.69% to 26,418.30. The move was a recovery from Tuesday's Fed decision, when the central bank raised its benchmark interest rate by 25 basis points (a basis point is 1/100th of a percentage point) to 3.75%–4%, its first hike since 2023, sending the Dow down over 600 points that day. The hike was a response to inflation stoked by rising oil prices tied to the ongoing US-Iran conflict. Stocks clawed back those losses over the following two sessions as oil prices eased and Treasury bond yields pulled back from multi-decade highs, easing fears the Fed's move would choke off growth. Semiconductor stocks led Thursday's charge, posting a third straight day of gains as investors bet on continued AI-driven chip demand, even as Fed officials signaled one more possible hike later this year.

The PSEi climbed 0.70% (41.70 points) Thursday to close at 5,958.64, rebounding after two straight losing sessions as investors hunted for bargains among beaten-down shares, according to Philstocks Financial. Still, the index couldn't reclaim the psychologically important 6,000 level, with analysts noting sentiment stayed cautious partly because of the same US Fed rate hike weighing on global markets. Locally, the Bangko Sentral ng Pilipinas (BSP, the Philippine central bank) has been fighting its own inflation battle, hiking its key rate to 5% in August, its third increase this year, as it works to bring inflation down from a forecast 6.1% for 2026, well above its 2%-4% target. The peso closed slightly stronger at ₱62.73 to the US dollar. Trading was heavy, with turnover of ₱23.14 billion versus a year-to-date daily average of ₱6.27 billion. Conglomerate stocks led sector gains (+1.45%), while bank shares lagged (-0.82%), sources including BPI Wealth's weekly commentary noting elevated local bond yields as a drag on financials.

The Fed's first rate hike since 2023 was a response to inflation reignited by oil prices tied to the US-Iran conflict, the same global oil shock is squeezing the Philippines. The peso has been trading near record-weak levels against the dollar, forcing the BSP into its own hiking cycle (three hikes this year, key rate now 5%) even as PH economic growth slows. The sectors most exposed are Philippine banks, whose margins and loan growth get squeezed by higher rates (banks were Thursday's weakest PSEi sector, down 0.82%), and heavy fuel users like power generators and airlines facing costlier energy inputs. One thing worth watching: the Fed signaled it may hike once more this year, which could pressure the peso further and test whether BSP Governor Eli Remolona's hope that August's hike was his last one holds up.