US stocks fall as Fed keeps rate hike prospects alive

A woman using an iPhone 6 by Apple in Munich, Germany.
A woman using an iPhone 6 by Apple in Munich, Germany.PHOTO: REUTERS

NEW YORK (AFP) - US stocks finished firmly lower on Wednesday after the Federal Reserve suggested more interest rates were possible in 2016 despite economic uncertainty that has roiled markets.

The Dow Jones Industrial Average fell 222.77 points (1.38 per cent) to 15,944.46.

The broad-based S&P 500 dropped 20.68 (1.09 per cent) to 1,882.95, while the tech-rich Nasdaq Composite Index slumped 98.51 (2.18 per cent) to 4,468.17.

The Fed, concluding its first policy meeting since an historic decision to hike rates in December, said US growth slowed late last year and hinted at more worries about global economic weakness as it kept its benchmark interest rate unchanged.

But the policymakers of the Federal Open Market Committee said they expected inflation, weakened by the slide in oil prices, would rise toward the 2 per cent target in the medium term, leaving the door open for a second rate increase in March.

 

Mace Blicksilver, director of Marblehead Asset Management, said investors were hoping for a more dovish statement from the US central bank.

“There’s a lot of unrealistic expectations,” he said.

“There were some irrational expectations that (chair) Janet Yellen was going to apologise for the December rate increase and promise never to raise rates ever again in anyone’s lifetime.”

Stocks were also weakened by disappointing outlooks from Boeing and Apple, which fell 8.9 per cent and 6.6 per cent, respectively.