Stocks give back gains as Fed hikes rates for third time this year.
U.S. stocks turned lower on Wednesday, as the Federal Reserve proceeded with its third interest rate increase of 2018.
All of Wall Street’s benchmark indexes recorded losses on Wednesday. The large-cap S&P 500 Index (NYSEARCA:SPY) fell 0.3% to 2,905.97.
Dow industrials (NYSEARCA:DIA) declined 106.93 points, or 0.3%, to close at 26,385.28.
Meanwhile, the technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) declined 0.2% to 7.990.37.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) rose on Wednesday, as optimism faded in afternoon trade. The so-called “fear index” rose 4.3% to 12.95 on a scale of 1-100 where readings below 20 signal complacency in the market.
The Federal Open Market Committee (FOMC) concluded its two-day policy meeting on Wednesday by raising interest rates by a quarter point to 2.25% in a decision that was already priced into the market. However, the central bank decided to remove language saying that “the stance of monetary policy remains accommodative.” Some traders interpreted this statement to mean that policymakers are done with regular rate hikes.
In economic data, U.S. new home sales rose much faster than expected last month, raising cautious optimism that real estate was slowly rebounding. The Commerce Department said new home sales climbed 3.5% in August to a seasonally adjusted 629,000 units.
The Final Word: September is shaping up to be a solid month for U.S. equities. The Dow and S&P 500 Index have set multiple record highs this month as volatility was kept in check by pro-growth optimism. It remains to be seen whether this narrative will survive the final quarter of 2018.