The Dow Jones industrial average fell on Wednesday after the Federal Reserve announced a widely expected quarter-point rate hike and expected it to “continue” to increase.
Losses were kept under control as the central bank He also gave some small hints Dialing back its tightness at some point. It said in its latest report that inflation had “decreased somewhat”.
The Dow Jones industrial average was down 327 points, or 1%. The S&P 500 was down 0.4%. The Nasdaq composite was steady, boosted by chipmakers’ gains after improved microdevices earnings.
The Fed raised rates to their highest level since October 2007 and said in its post-meeting statement that “continued increases in the target range would be appropriate to achieve a stance of monetary policy that is sufficiently accommodative to return inflation to 2 percent. Over time.”
But the Fed will also take into account overall tightening so far, in determining the “size” of future hikes.
Investors will closely follow Chairman Jerome Powell’s comments after the Fed’s announcement. Some recent indicators that inflation is slowing in the broader economy have investors looking for a dovish tone from the central bank chief. On Tuesday, the Employment Cost Index, a measure of wage increases, showed compensation rose 1% in the fourth quarter, up from 1.2% in the third quarter.
However, traders may be getting ahead of themselves looking for signs that a pause or even a pivot in the uptrend is imminent.
“I don’t see any signs yet that the Fed is open to 2023 rate cuts,” said Phil Chokes, portfolio manager at Brandywine Global. “I don’t know that the Feds are trying for a soft landing. Although they won’t say so, they probably like the restorative aspects of a recession and a proper bear market.”
Fourth-quarter corporate earnings show resilient profits. Peloton Shares rose more than 17% after the fitness equipment company said Net loss decreased year-on-year. Advanced Micro Devices Shares gained more than 8% after the semiconductor company Reported fourth quarter earnings beat. Meanwhile, Snap Shares fell more than 13% after the social media company posted disappointing quarterly earnings.
Wall Street is coming off a strong session at the end of January. The S&P 500 posted its best January performance since 2019, while the tech-heavy Nasdaq Composite had its strongest January in 22 years.
