U.S. stocks ended lower on Wednesday in a volatile trading session as the Fed hiked interest rates by 50 basis points but signaled more rate hikes in the coming months. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.4% or 142.29 points to close at 33,966.35 points.
The S&P 500 fell 0.6% or 24.33 points to finish at 3,995.32 points. Communication services, financials and materials were the worst performers on the index.
The Communication Services Select Sector SPDR (XLC) and the Financials Select Sector SPDR (XLF) each declined 1.3%. The Materials Select Sector SPDR (XLB) fell 1.1%. Ten of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq declined 0.8% or 85.93 points to end at 11,170.89 points.
The fear-gauge CBOE Volatility Index (VIX) was down 6.25% to 21.14. Decliners outnumbered advancers on the NYSE by a 1.39-to-1 ratio. On Nasdaq, a 1.42-to-1 ratio favored declining issues. A total of 12.15 billion shares were traded on Wednesday, higher than the last 20-session average of 10.55 billion.
Investors Assess Rate Hike and Inflation Status
Wall Street ended lower on Wednesday in a choppy trading session as they digested another round of interest rate hikes. The Fed hiked interest rates by another 50 basis points. Investors had been hoping for a 50-basis point rate hike as fresh economic data released earlier this week showed that inflation is slowing.
The Fed had also hinted at slowing down its pace of rate hikes after increasing interest rates by 75 basis points for the fourth consecutive time since June. Sentiments were bullish ahead of the announcement which saw the Dow climbing as much as 287.01 points earlier in the day.
However, investors’ confidence was dented after the Fed along with the announcement also signaled further rate hikes through 2023. The Fed also said that it required more economic data to change its view of the current state of inflation. Wednesday’s 50-basis point rate hike took the benchmark range of 4.25% to 4.50%, the highest since 2007.
The Fed also said that it now sees taking rates to the benchmark range of 5.1%, before it takes a call on pausing the hikes, which is higher than the forecast of 4.6% the central bank said in September.
This once again raised concerns among investors as they assessed that constant rate hikes could further slow down the economy and might push the nation into a recession.
Financial stocks were one of the worst performers on Wednesday. Shares of Bank of America Corporation
BAC
and The Goldman Sachs Group, Inc.
GS
fell 1.4% and 2.3%, respectively. Bank of America has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Treasury yields also fluctuated during Fed Chair Jerome Powell’s press conference and ended the session lower after the central bank indicated more rate hikes in the coming months. Shares of Apple Inc.
AAPL
declined 1.6%, while Netflix, Inc.
NFLX
fell 0.8%.
Economic Data
In other economic data released on Wednesday, the Labor Department said that U.S. import prices decreased 0.6% in November, after falling 0.4% the prior month. Prices of U.S. exports decreased 0.3% in November, after falling 0.4% in October.
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