Feb 1 (Reuters) – U.S. stock indexes fell in choppy trade on Wednesday, bouncing off session lows when the Federal Reserve raised interest rates by a quarter of a percentage point and said it expected “continued increases” in borrowing costs as it went ahead. Fighting high inflation.
Its statement hinted that future price increases were likely to be in quarter-point increments, replacing reference to the “frequency” of future increases with reference to the “extent” of price changes.
The size of the increase at the first policy meeting of the year was in line with expectations after rapid increases in 2022 aimed at taming decades-high inflation.
“The Fed didn’t throw any curveballs, as it did what was widely expected. The door is open to ending the rate hikes, but they still have a chance to raise rates again,” said Ryan Dietrick, chief market strategist at Carson Group in Omaha. Another at the next meeting.” “The economy is still growing, which is a relief because (the Federal Reserve) is not worried about an impending recession.”
Detrick also said the Fed will likely “end the hikes fairly soon as inflation data continues to show significant improvements, which is exactly what the Fed needs to get off the pedal.”
By 2:18 p.m. EST (1918 GMT), the Dow Jones Industrial Average (.DJI) The index fell 328.79 points, or 0.96%, to 33,757.25 points, and the Standard & Poor’s 500 (.SPX) It lost 16.5 points, or 0.40%, to 4,060.1 points, and the Nasdaq Composite Index. (nineteenth) It fell 3.75 points, or 0.03%, to 11,580.81 points.
The Nasdaq moved between red and green after the Fed’s announcement but made little headway either way.
After the statement, money markets were betting on a final rate of 4.94% in June compared to 4.92% a little earlier, but US futures were still pricing in a rate cut this year, with the fed funds rate at 4.486% by the end of December. The same as before the meeting.
Recent readings indicated that inflation is easing, as the Fed is also looking at data that will determine the elasticity of the labor market and the pace of wage growth.
But the data showed that US employment rose unexpectedly in December ahead of the Labor Department’s comprehensive report on non-farm payrolls for January due on Friday.
Separate economic data showed that US manufacturing contracted further in January as higher rates choked off demand for commodities.
All three indices had a strong start to the year, with the S&P (.SPX) and daw (.DJI) They saw their first gains for the month of January since 2019 as investors returned to the markets, which had been hit the previous year by the hawkish Federal Reserve.
Most of the 11 major sectors in the S&P 500 were in the red, with only technology shares (.SPLRCT) up a bit.
Low issues outnumbered high issues on the NYSE by a ratio of 1.27 to 1; On the Nasdaq, a ratio of 1.04 to 1 favored the bulls.
The S&P 500 posted 14 new highs in 52 weeks and no new lows. The Nasdaq index posted 89 new highs and 22 new lows.
Additional reporting by Sinad Caro and Stephen Culp in New York and Johann M. Cherian and Shriyashi Sanyal in Bengaluru; Additional reporting by Anika Biswas; Editing by Sriraj Kaluvella, Magu Samuel and David Gregorio
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