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Markets ended in negative territory following the much expected quarter-point rate hike by the Fed. The central bank also increased its GDP projection for 2018, paving the way for future rate hikes. Meanwhile, existing home sales rebounded in February following back-to-back declines in the two months prior to the current period.
The Dow Jones Industrial Average (DJI) increased 0.2% to close at 24,682.31. The S&P 500 lost 0.2% to close at 2,711. The tech-laden Nasdaq Composite Index closed at 7,345.29, decreasing 0.3%. The fear-gauge CBOE Volatility Index (VIX) increased 4.1% to close at 18.94.
A total of 6.72 billion shares were traded on Wednesday, lower than the last 20-session average of 7.16 billion shares. Advancers outnumbered decliners on the NYSE by a 1.35-to-1 ratio. On Nasdaq, a 1.49-to-1 ratio favored advancing issues.
Fed Hikes Interest Rates and Central Bank Ups GDP Forecast
As was widely anticipated, the Fed on Wednesday increased the key U.S. interest rate by as much as 25 basis points. However, the Federal Open Market Committee (FOMC) adhered to its December forecast of three rate hikes for 2018. This increase in interest rates is the sixth such hike since December 2015.
Fed’s unanimous decision of raising the benchmark interest rate to between 1.5%-1.75%, was followed by a prediction that there might be as many as eight quarter-point hikes in rates by the end of 2020, which includes the most recent hike and the two more to follow this year. Additionally, the Fed sees three hikes in 2019 and two more the next year, thereby increasing the interest rate to 3.4% by the end of 2020.
The Fed also stated that “the economic outlook has strengthened in recent months.” It further commented that the household and business fixed investment “have moderated from their strong fourth-quarter readings.”
Further, the central bank increased its GDP forecast for the U.S. economy. Officials from the central bank increased their forecast for GDP growth in 2018 from 2.5% to 2.7%. Meanwhile, the projection for 2019 was raised from 2.1% to 2.4%. The central bank also noted that this rate of growth would decelerate beyond 2019, projecting only a 2% rate of growth for 2020 and 1.8% in the period beyond that.
How did the Benchmarks Perform?
The Dow lost almost 45 points to end in negative territory on Wednesday. A decline in the shares of Apple (AAPL - Free Report) added to the blue-chip index’s woes. Shares of Apple tanked 2.3% on Wednesday. However, the Dow surged more than 250 points at its session highs.
Meanwhile, the S&P 500 shed 5 points to also finish lower. Of the 11 major segments of the S&P 500, only 3 ended in the green, with energy shares leading the advancers and consumer staples heading the decliners.
The Energy Select Sector SPDR ETF (XLE) surged 2.6% whereas the Consumer Staples Select Sector SPDR ETF (XLP) declined 1.2%. Energy shares surged after oil futures hit a seven-week high on Wednesday.
The Russell 2000 index, which tracks small cap stocks, surged 8.9% to close at 1,579.30. Gains for the index were buoyed by a sharp rise in banking stocks after Fed’s announcement of a hike in interest rates. The yield on 10-year U.S. Treasury note shot up 2.93% initially after the announcement but fell to 2.883%. Also, the yield on two-year note fell from a nine-year high.
Economic Data
On the economic data front, existing home sales for the month February increased 5.54 million units, surpassing the consensus estimate of an increase of 5.41 million units. The reading also surpassed previous month figure of 538 million units.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Stock Market News For Mar 22, 2018
Markets ended in negative territory following the much expected quarter-point rate hike by the Fed. The central bank also increased its GDP projection for 2018, paving the way for future rate hikes. Meanwhile, existing home sales rebounded in February following back-to-back declines in the two months prior to the current period.
The Dow Jones Industrial Average (DJI) increased 0.2% to close at 24,682.31. The S&P 500 lost 0.2% to close at 2,711. The tech-laden Nasdaq Composite Index closed at 7,345.29, decreasing 0.3%. The fear-gauge CBOE Volatility Index (VIX) increased 4.1% to close at 18.94.
A total of 6.72 billion shares were traded on Wednesday, lower than the last 20-session average of 7.16 billion shares. Advancers outnumbered decliners on the NYSE by a 1.35-to-1 ratio. On Nasdaq, a 1.49-to-1 ratio favored advancing issues.
Fed Hikes Interest Rates and Central Bank Ups GDP Forecast
As was widely anticipated, the Fed on Wednesday increased the key U.S. interest rate by as much as 25 basis points. However, the Federal Open Market Committee (FOMC) adhered to its December forecast of three rate hikes for 2018. This increase in interest rates is the sixth such hike since December 2015.
Fed’s unanimous decision of raising the benchmark interest rate to between 1.5%-1.75%, was followed by a prediction that there might be as many as eight quarter-point hikes in rates by the end of 2020, which includes the most recent hike and the two more to follow this year. Additionally, the Fed sees three hikes in 2019 and two more the next year, thereby increasing the interest rate to 3.4% by the end of 2020.
The Fed also stated that “the economic outlook has strengthened in recent months.” It further commented that the household and business fixed investment “have moderated from their strong fourth-quarter readings.”
Further, the central bank increased its GDP forecast for the U.S. economy. Officials from the central bank increased their forecast for GDP growth in 2018 from 2.5% to 2.7%. Meanwhile, the projection for 2019 was raised from 2.1% to 2.4%. The central bank also noted that this rate of growth would decelerate beyond 2019, projecting only a 2% rate of growth for 2020 and 1.8% in the period beyond that.
How did the Benchmarks Perform?
The Dow lost almost 45 points to end in negative territory on Wednesday. A decline in the shares of Apple (AAPL - Free Report) added to the blue-chip index’s woes. Shares of Apple tanked 2.3% on Wednesday. However, the Dow surged more than 250 points at its session highs.
Meanwhile, the S&P 500 shed 5 points to also finish lower. Of the 11 major segments of the S&P 500, only 3 ended in the green, with energy shares leading the advancers and consumer staples heading the decliners.
The Energy Select Sector SPDR ETF (XLE) surged 2.6% whereas the Consumer Staples Select Sector SPDR ETF (XLP) declined 1.2%. Energy shares surged after oil futures hit a seven-week high on Wednesday.
Meanwhile, the Nasdaq lost 19 points to end in the red. Losses for the tech-laden index followed a dip in Apple’s shares. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Russell 2000 index, which tracks small cap stocks, surged 8.9% to close at 1,579.30. Gains for the index were buoyed by a sharp rise in banking stocks after Fed’s announcement of a hike in interest rates. The yield on 10-year U.S. Treasury note shot up 2.93% initially after the announcement but fell to 2.883%. Also, the yield on two-year note fell from a nine-year high.
Economic Data
On the economic data front, existing home sales for the month February increased 5.54 million units, surpassing the consensus estimate of an increase of 5.41 million units. The reading also surpassed previous month figure of 538 million units.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>