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U.S. stocks finished lower on Wednesday after the Federal Reserve kept interest rates unchanged as widely expected but hinted at another hike in November and indicated that the fight against inflation was far from over. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.2% or 76.85 points to finish at 34,440.88 points.
The S&P 500 fell 0.9% or 41.75 points, to end at 4,402.20 points. Consumer discretionary, technology, communication services and materials stocks were the worst performers.
The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) declined 1% and 1.6%, respectively. The Communication Services Select Sector SPDR (XLC) fell 1.4%, while the Materials Select Sector SPDR (XLB) lost 1.1%. Seven of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq slipped 1.5% or 209.06 points to finish at 13,469.13 points.
The fear-gauge CBOE Volatility Index (VIX) was up 7.30% to 15.14. A total of 9.73 billion shares were traded on Wednesday, lower than the last 20-session average of 10.07 billion. Decliners outnumbered advancers on the NYSE by a 1.46-to-1 ratio. On the Nasdaq, a 1.90-to-1 ratio favored declining issues.
Interest Rates Intact, Investors Worry on Fed’s Outlook
The Federal Reserve kept its policy interest rates unchanged, as widely expected, at the end of its two-day FOMC meeting on Wednesday. However, concerns over an economic slowdown grew as the Fed said that its fight against inflation was far from over and indicated at least one more rate interest hike this year.
The Fed said that the majority of the officials believe that at least another quarter percent point hike is required this year, which is likely to come in November before the central bank ends its current monetary tightening campaign.
The Fed also said that it plans to start cutting rates from next year. However, it said that it will keep rates at a higher level for 2024 than it had signaled earlier in June as it cut its forecast for rate cuts to two from four.
The benchmark interest rate will be hovering above the 5% mark by the end of next year. The Fed’s benchmark rate now stands in the range of 5.25%-5.5% after today’s decision.
The Fed was expected to maintain its hawkish stance and investors had been worrying on that over the past few sessions as some stronger-than-expect economic data in recent times coupled with surging oil prices, which hit a 10-month high, have raised concern that inflationary pressures will prove to be stubborn.
Fed Chair Jerome Powell also hinted that the U.S. economy will likely slow to a growth rate of 1.5% in 2024 after a projected 2.1% growth this year. However, it projected the economy to speed up again after that and inflation to cool to 2.5% by the end of 2024 from 3.3% this year, based on the central bank’s preferred Personal consumption expenditure (PCE) gauge.
Following this the 2-year Treasury yield jumped to its highest level since 2006. Also, the 10-year Treasury yield hit its highest level since November 2007. Tech and consumer discretionary stocks too a major beating.
Image: Bigstock
Stock Market News for Sep 21, 2023
U.S. stocks finished lower on Wednesday after the Federal Reserve kept interest rates unchanged as widely expected but hinted at another hike in November and indicated that the fight against inflation was far from over. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.2% or 76.85 points to finish at 34,440.88 points.
The S&P 500 fell 0.9% or 41.75 points, to end at 4,402.20 points. Consumer discretionary, technology, communication services and materials stocks were the worst performers.
The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) declined 1% and 1.6%, respectively. The Communication Services Select Sector SPDR (XLC) fell 1.4%, while the Materials Select Sector SPDR (XLB) lost 1.1%. Seven of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq slipped 1.5% or 209.06 points to finish at 13,469.13 points.
The fear-gauge CBOE Volatility Index (VIX) was up 7.30% to 15.14. A total of 9.73 billion shares were traded on Wednesday, lower than the last 20-session average of 10.07 billion. Decliners outnumbered advancers on the NYSE by a 1.46-to-1 ratio. On the Nasdaq, a 1.90-to-1 ratio favored declining issues.
Interest Rates Intact, Investors Worry on Fed’s Outlook
The Federal Reserve kept its policy interest rates unchanged, as widely expected, at the end of its two-day FOMC meeting on Wednesday. However, concerns over an economic slowdown grew as the Fed said that its fight against inflation was far from over and indicated at least one more rate interest hike this year.
The Fed said that the majority of the officials believe that at least another quarter percent point hike is required this year, which is likely to come in November before the central bank ends its current monetary tightening campaign.
The Fed also said that it plans to start cutting rates from next year. However, it said that it will keep rates at a higher level for 2024 than it had signaled earlier in June as it cut its forecast for rate cuts to two from four.
The benchmark interest rate will be hovering above the 5% mark by the end of next year. The Fed’s benchmark rate now stands in the range of 5.25%-5.5% after today’s decision.
The Fed was expected to maintain its hawkish stance and investors had been worrying on that over the past few sessions as some stronger-than-expect economic data in recent times coupled with surging oil prices, which hit a 10-month high, have raised concern that inflationary pressures will prove to be stubborn.
Fed Chair Jerome Powell also hinted that the U.S. economy will likely slow to a growth rate of 1.5% in 2024 after a projected 2.1% growth this year. However, it projected the economy to speed up again after that and inflation to cool to 2.5% by the end of 2024 from 3.3% this year, based on the central bank’s preferred Personal consumption expenditure (PCE) gauge.
Following this the 2-year Treasury yield jumped to its highest level since 2006. Also, the 10-year Treasury yield hit its highest level since November 2007. Tech and consumer discretionary stocks too a major beating.
Shares of Apple Inc. ((AAPL - Free Report) ) declined 2%, while Meta Platforms, Inc. ((META - Free Report) ) fell 1.8%. Also, shares of Royal Caribbean Cruises Ltd. ((RCL - Free Report) ) dropped 2.2%. Royal Caribbean Cruises carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
No major economic data was released on Wednesday.