(Reuters) – The New York Stock Exchange ended lower on Wednesday despite the Federal Reserve’s decision not to raise key interest rates, the first since March 2022, as the central bank cooled investors by paving the way for two possible hikes before the end of the year.
The Dow Jones index fell 0.68% or 232.79 points to 33,979.33 points.
The broader S&P-500 rose 3.58 points, or 0.08%, to 4,372.59.
More optimistically, the Nasdaq Composite rose 53.16 points (+0.39%) to 13,626.48 points.
Responding to expectations after strong producer and consumer price data, the Federal Reserve’s Monetary Policy Committee (FOMC) left its key interest rates unchanged on Wednesday, a move it had not done in 10 meetings. The target remains set at 5.00%-5.25%, as expected by a large majority of experts polled by Reuters.
The Fed, on the other hand, blew the lid off by opening the door to two more hikes of a quarter point each by the end of the year, a more “hawkish” stance than investors had expected.
Its chairman, Jerome Powell, emphasized at a press conference that the members of the committee were in favor of continued monetary policy tightening.
He suggested that no decision had yet been made for July, but that it would be a “live meeting” (open meeting) likely to lead to a rate hike.
The trend reversed on Wall Street after this announcement, although the S&P-500 finally ended slightly in the green in a sluggish market.
“Some expected the Fed to pause this month but not raise rates again,” said Sam Stovall, chief investment strategist at CFRA Research. “However, it appears that FOMC members have become even more aggressive since the last meeting, and I think that caught investors off guard.”
Regardless of the “Fed effect,” health insurer United Health fell 6.4% after saying it expected higher medical costs in the second quarter, weighing on the Dow Jones.
On the other hand, electronic chip makers Nvidia (+4.8%) and Broadcom (+4.1%) were sought.
(Written by Noel Randewich and Sruthi Shankar, French version Tangi Salaün)
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