AP Photo/Richard Drew
Stocks fell Wednesday, erasing earlier gains after the Federal Reserved increased borrowing costs.
The Fed signaled it expects to hike rates twice in 2019. It previously had expected three rate hikes next year.
All three major US indices fell into correction territory earlier this month.
Watch the major US indexes trade in real time here.
Stocks wiped out gains and ended at their lowest levels in more than a year Wednesday after the Federal Reserve increased its benchmark interest rate by a quarter percentage point, while also signaling fewer rate hikes in 2019 than previously expected.
The Dow Jones Industrial Average fell more than 700 points from session highs to trade down 1.54%, its lowest close since November 2017. After rising more than 1% each ahead of the Fed meeting, the Nasdaq Composite tumbled 2.17% and the S&P 500 shed 1.25%.
A series of sell-offs this month have sent all three indices into correction territory, or down more than 10% from recent highs, as investors fret over rising rates and the prospect of slowing economic growth.
The Fed raised its benchmark interest rate to a target range of between 2.25% and 2.5%, as was widely expected, marking the fourth hike this year and the ninth since 2015. The central bank also signaled it would take a tentative approach to monetary policy next year.
“The Fed’s projections for the path of interest rates in the year ahead tilted dovish relative to its stance three months ago, as policymakers appear to be backing off their previous intentions to raise rates three times in 2019,” said Jason Pride, chief investment officer of private wealth at Glenmede.
The dollar slid against a basket of peers following the data. The yield on the 10-year Treasury fell 4.7 basis points to 2.776%, while the yield on the 2-year was mostly unchanged at 2.654%.
Facebook wiped out billions of dollars in market value as it came under scrutiny on multiple fronts. The attorney general for Washington, DC, said it had sued Facebook over its involvement with Cambridge Analytica. A day earlier, the New York Times reported the social media giant granted some technology companies greater access to user data than has been disclosed.
Semiconductor shares were broadly lower, with NXP and Nvidia down 7.4% and 5.7%, respectively. Micron, which posted guidance that missed Wall Street expectations after the bell Tuesday, dropped 7.9%.
Oil prices jumped more than 3% after the US reported a drawdown in inventories for a third straight week. West Texas Intermediate was trading around $47.30 per barrel, and Brent just under $57.
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