NEW YORK: Wall Street stocks declined on Wednesday (May 3) after the Federal Reserve (Fed) lifted interest rates again, but signaled it could pause on additional hikes.
The Dow Jones Industrial Average fell 270.29 points, or 0.8%, to 33,414.24, the S&P 500 lost 28.83 points, or 0.70%, to 4,090.75 and the Nasdaq Composite dropped 55.18 points, or 0.46%, to 12,025.33.
All of the major S&P 500 sectors ended lower, with energy and financials down the most. The KBW regional banking index was down 0.9%, extending this week's sharp losses.
The Fed raised its benchmark lending rate for a tenth consecutive time on Wednesday, by another quarter-point, in a move that was widely expected by analysts.
“The Fed continues to walk the tightrope, and that is they’re trying to strike a balance between their inflation fighting credibility while trying to engineer a soft landing,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
The central bank said it would monitor economic conditions to determine if additional steps may be appropriate, modifying earlier language that suggested more strongly that higher rates were coming.
“We feel like we’re getting close, or maybe even there” when it comes to raising interest rates sufficiently to counter inflation, Fed chair Jerome Powell said during a press conference.
But he also ruled out interest rate cuts in 2023, a comment that sent stocks lower in their final shift of the day.
“It feels like the market didn’t get everything it wanted but maybe got everything it could expect,” said Art Hogan, an analyst at B. Riley Financial, who characterised the decision as a “moderately dovish hike”.
But Steve Sosnick of Interactive Brokers said the market’s pullback reflected that “people have been coming around to the general consensus that this was more hawkish than the dovish”.
Regional banking shares, which have been under pressure following recent bank failures, ended the day lower, reversing earlier gains.
PacWest Bancorp lost 2%, KeyCorp declined nearly 2% and Zions Bancorporation fell 5.3%. – AFP, Reuters
Source: The Sun Daily
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