US stocks end volatile day lower as Fed lifts rates

US stocks finished slightly lower after the central bank raised interest rates.
VIDEO: REUTERS

NEW YORK (AFP) - Wall Street stocks finished a volatile session modestly lower on Wednesday (March 21) after the Federal Reserve lifted interest rates and pointed to a stronger US growth outlook following tax cuts.

The Dow Jones Industrial Average shed 0.2 per cent to 24,682.31.

The broad-based S&P 500 lost 0.2 per cent at 2,711.93, while the tech-rich Nasdaq Composite Index declined 0.3 per cent to 7,345.29.

The Fed, as expected, raised its key lending rate, citing the improved US growth and employment outlook.

In its quarterly forecasts, Fed officials projected the benchmark interest rate would end this year at 2.1 per cent after two more hikes, unchanged from the December forecast, but would rise to 2.9 per cent at the close of 2019, signalling three possible hikes that year.

US stocks initially rallied on the Fed announcement, which suggested no plans to immediately accelerate the pace of tightening monetary policy.

But markets later pulled back during new Fed Chair Jerome Powell's news conference in which he was asked repeatedly about risks to the economic outlook, including from a possible trade war between the US and China.

"Powell's first press conference was largely uneventful, with the new chair sticking to a script similar to Yellen's, thus sending a message of continuity despite new management," said FTN Financial's Chris Low.

"His answers were safe, offering little guidance on the committee's thinking beyond what was already revealed."

 

Petroleum-linked shares jumped as oil prices rallied on data showing a drop in US oil inventories. Dow members Exxon Mobil and Chevron rose 1.4 per cent and 2.2 per cent respectively.

Packaged food companies stumbled after General Mills warned that steepening commodity costs would dent profits. General Mills tumbled 8.8 percent while Kellogg dropped 4 per cent, Campbell Soup 2.2 per cent and Mondelez International 0.8 per cent.

Tesla Motors jumped 1.9 per cent after shareholders approved a pay package worth potentially billions of dollars for chief executive Elon Musk if the company meets its targets for operations and market capitalisation.

Shares in the Nordstrom department store chain fell 3.3 per cent as it announced that an effort by Nordstrom family members to take the company private was being terminated due to disagreement on price.