WALL Street stocks finished mostly lower on Wednesday, concluding a volatile session after the Federal Reserve kept interest rates flat and signaled rate hikes were not probable.
Major equities had shot higher after Fed Chair Jerome Powell called further rate hikes unlikely, but those gains largely faded in the final moments of the session.
The Dow Jones Industrial Average ended at 37,903.29, up 0.2 per cent from Tuesday, but down almost 450 points from its session peak.
The broad-based S&P 500 declined 0.3 per cent to 5,018.39, while the tech-rich Nasdaq Composite Index lost 0.3 per cent at 15,605.48.
The Fed, as expected, kept interest rates flat for the sixth straight meeting.
The central bank’s prior outlook had projected three interest rate cuts in 2024. But inflation has accelerated, throwing cold water on hopes of an early rate cut this year.
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Heading into Wednesday’s policy announcement, analysts had pointed to a hawkish comment on the likelihood of a rate hike as a potential risk for stocks.
However, Powell told a press conference that the central bank’s next change would probably not be an interest rate increase.
Art Hogan of B. Riley Financial said stocks often “whipsaw” right after Fed decisions.
“At the end of the day we’re back to where we were before the meeting… and that’s basically higher for longer” in terms of interest rates, Hogan said.
Among individual companies, Starbucks plunged 15.9 per cent as it reported a drop in profits, pointing to weakening consumer sentiment and lackluster conditions in China as factors behind an earnings miss.
Drugstore giant CVS Health dove 16.8 per cent as it cut its profit forecast range on higher costs connected with its Medicare coverage plan.
Johnson & Johnson gained 4.6 per cent after announcing a plan to pay US$6.5 billion to settle claims related to ovarian cancer due to the company’s talc products. If 75 per cent of claimants favor the plan, J&J can file a “prepackaged” Chapter 11 bankruptcy.
New York Community Bancorp surged 28.1 per cent after CEO Joseph Otting said the lender has a “clear path to profitability over the following two years.” The bank had appeared in trouble earlier this year prior to an infusion in funds from investors. AFP
