NEW YORK: Wall Street stocks fell on Wednesday (Dec 14) after the Federal Reserve (Fed) sketched out plans for additional interest rate increases despite recent data showing a moderation in inflation.
Fed chair Jerome Powell said he was encouraged by the latest consumer price data, but that the central bank’s policy was “still not restrictive enough” in light of too-high inflation.
The Dow Jones Industrial Average fell 142.29 points, or 0.42%, to 33,966.35, the S&P 500 lost 24.33 points, or 0.61%, to 3,995.32 and the Nasdaq Composite dropped 85.93 points, or 0.76%, to 11,170.89.
Each of the three major averages on Wall Street are on track for their first yearly decline since 2018, and their biggest yearly percentage decline since the financial crisis of 2008.
The US central bank, as expected, announced it would lift the benchmark lending rate by a half percentage point, a smaller increase after four straight 0.75-point hikes.
The Fed’s announcement “certainly did not live up to the market’s more hopeful expectations that the Fed might throw the market a carrot”, said Briefing.com analyst Patrick O’Hare, who characterised the thrust of the central bank’s announcements as “hawkish-minded”.
Despite the Fed statement, US Treasury yields were slightly lower after initially jumping in the wake of the announcement.
The strategy of aggressive interest rate increases by major central banks around the world this year has increased worries the global economy could be pushed into a recession and weighed heavily on riskier assets such as equities this year.
Among individual companies, Delta Air Lines rose 2.8% as it raised its fourth-quarter financial forecasts and predicted solid earnings growth in 2023.
Tesla Inc slipped 2.58% after a Goldman Sachs analyst trimmed the price target for the electric-vehicle maker's stock. – AFP, Reuters