U.S. Stocks Slide After Fed Rate Hike as Energy, Utilities Drop

  • Policy makers see faster pace of increases next year
  • S&P 500, Dow, Nasdaq 100 rose to record highs on Tuesday

U.S. stocks slipped as all 11 groups in the S&P 500 Index turned negative after the Federal Reserve raised interest rates and forecast a steeper path for borrowing cost increases next year. 

The S&P 500 Index fell 0.8 percent to 2,253.28 at 4 p.m. in New York after setting a record Tuesday. The Dow Jones Industrial Average dropped 118.68 points to 19,792.53. The Russell 200 Index fell 1.3 percent.

U.S. Stock Market

  • Financial shares down 0.6% after briefly jumping in the wake of the Fed news
  • Tech stocks erase earlier gains as leaders from the industry head to Trump Tower to meet with the president-elect
  • Energy shares down 2.1% as crude fell after a report that showed supplies at the biggest U.S. storage hub rose to a six-month high
  • Futures traders had priced in higher borrowing costs as a virtual certainty at today’s meeting
  • Utilities and consumer-staples stocks had been leading intraday market gains until the hike; ended down 2% and 1%, respectively
    • Utilities had climbed 4% in the past week before today as phone shares and staples stocks also rallied; financial and industrial companies were down at least 0.4% in past week
  • New projections show central bankers expect three quarter-point rate increases in 2017, up from the two seen in the September forecast
    • More on expectations from the central bank here
  • For Stephane Barbier de la Serre, strategist at Makor Capital Markets in Geneva, whatever the outcome of the Fed meeting, any signs of dovishness by the central bank would increase the risk of a drop in bond prices
  • The recent rally in stocks has sent the Dow to its most “overbought” level since 1996. A pullback for the relative strength index below 70 could spur more declines, according to technical analysis
  • The Nasdaq 100 also rallied on Tuesday, reaching a fresh record

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