U.S. stocks fluctuate following Fed’s decision to hike rates.
U.S. stocks sputtered on Wednesday and eventually settled lower as markets dissected the Federal Reserve’s decision to raise interest rates for the second time this year.
The large-cap S&P 500 Index (NYSEARCA:SPY) closed down 0.4% at 2,775.63. Nine of 11 primary sectors finished lower, with telecommunication services plunging almost 4%. Shares of real estate companies also fell more than 2%.
Dow industrials (NYSEARCA:DIA) settled down 119.53 points, or 0.5%, at 25,201.20.
The technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) reversed gains to settle at
A measure of 30-day volatility known as the CBOE VIX (NYSEARCA:VXX) crept higher on Wednesday as investors reacted to geopolitics and monetary policy. The so-called “fear index” settled up nearly 5% at 12.94.
The Federal Open Market Committee (FOMC) concluded its two-day policy meeting on Wednesday by voting to raise the benchmark interest rate to 2%. In reaching the decision, FOMC officials hinted at two more upward adjustments this year.
“The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,” the statement said.
FOMC members are scheduled to meet again in July.
The Final Word: Although the Fed’s decision to raise interest rates was priced into the market, fewer had expected four upward adjustments this year. Based on the central bank’s recent policy statement, four rate hikes are firmly on the table for 2018.