Stocks wobble and end lower after Fed raises interest rates
Stocks traded higher early in the day and jumped after the Fed announced its decision.
After a jittery afternoon of trading, major US stock indexes fell on Wednesday as the Federal Reserve raised interest rates and said it could raise rates at a quicker pace next year.
Stocks traded higher early in the day and jumped after the Fed announced its decision. The Dow Jones industrial average climbed 250 points, but gave it all up as new Fed Chairman Jerome Powell addressed reporters.
At the end of trading it wobbled and ended lower. The dollar weakened and bond yields turned lower. Yields had risen earlier in the afternoon.
The Fed said the US economy and the job market continued to improve over the last two months. It still expects to raise interest rates three times this year, and said it might raise rates three more times next year instead of two.
Brent Schutte, the chief investment strategist for Northwestern Mutual Wealth Management, said Powell is trying to tell Wall Street what the Fed’s plans are without worrying investors too much. He said stocks dropped after Powell said rates might rise higher than the Fed expects.
“The market will have to get to know Jerome Powell a little bit and will have to test his credibility as Fed chairman,” he said.
“I would imagine the bar is higher for him in the shorter term because he is not a trained economist,” unlike Janet Yellen and other predecessors.
The S&P 500 index slid 5.01 points, or 0.2%, to 2,711.93. The Dow Jones industrial average lost 44.96 points, or 0.2%, to 24,682.31. The Nasdaq composite fell 19.02 points, or 0.3%, to 7,345.29. The Russell 2000 index of smaller companies gained 8.90 points, or 0.6%, to 1,579.30.
Bond prices edged lower. The yield on the 10-year Treasury note declined to 2.88% from 2.90% on Tuesday. It had risen as high as 2.93% as investors expected quicker gains in interest rates.