US Stock Indexes Mixed Ahead of Fed Announcement; Oil Rises
FED WATCH: The Federal Reserve decided to leave its short-term benchmark interest rate between 1 percent and 1.25 percent, but policymakers said they still expect to increase the rate one more time this year and three times in 2018, if persistently low inflation rebounds. The Fed has modestly raised the rate four times since December 2015 after keeping it at a record low for seven years after the 2008 financial crisis.
The Fed also said Wednesday that it will begin to gradually unwind its $4.5 trillion balance sheet next month. The portfolio primarily consists of government and mortgage-backed bonds. That will gradually increase long-term borrowing rates.
FED BOOST: Banks and other financial companies were among the biggest gainers. The sector got a boost after the Fed announced that it will likely raise its key short-term interest rate one more time before the end of the year. Banks benefit from higher rates, which can translate into higher profits from lending money. Charles Schwab climbed 68 cents, or 1.6 percent, to $41.72. Hartford Financial Services Group rose 70 cents, or 1.3 percent, to $55.10.
BONDS: Bond prices fell after the Fed announcement. The yield on the 10-year Treasury note jumped to 2.28 percent from 2.25 percent late Tuesday. The rise in bond yields weighed on utilities, real estate companies and other bond proxies.
CURRENCIES: The Fed statement also gave a boost to the dollar, which climbed to 112.31 yen from 111.50 yen on Tuesday. The euro weakened to $1.1886 from $1.1997.
TECH SLIDE: Technology companies declined. Skyworks Solutions slid $5.83, or 5.4 percent, to $102.10. Apple fell $3.32, or 2.1 percent, to $155.41. Western Digital lost $4.38, or 4.9 percent, to $85.54.
BEYOND DISAPPOINTED: Shares in Bed Bath and Beyond plunged 16.2 percent after the home goods retailer reported that its latest quarterly sales at stores open at least a year, a key metric for retailers, fell short of analysts’ forecasts. The stock lost $4.38 to $22.65.
HURRICANE IMPACT: The National Association of Realtors said that sales of previously occupied U.S. homes fell 1.7 percent in August. Sales were hurt by a worsening shortage of homes for sale, a trend exacerbated by the damage caused by Hurricane Harvey’s strike on Texas and Louisiana last month. Over the past 12 months, U.S. home sales have risen only 0.2 percent. The report pulled down homebuilder shares. Hovnanian Enterprises was down the most, losing 5 cents, or 2.8 percent, to $1.71.
CLOUD CONCERNS: Adobe Systems fell 4.5 percent. While the business software company posted solid quarterly results, investors were concerned about the performance of its cloud business. The stock slid $7.01 to $149.59.
UNAPPETIZING RESULTS: General Mills tumbled 6.3 percent after the cereal maker’s latest quarterly results fell short of Wall Street’s expectations. The stock was down $3.48 to $51.90. General Mills’ woes were weighing on other food companies. Kellogg was off $1.31, or 2 percent, to $64.56, while Campbell Soup lost $1.11, or 2.3 percent, to $46.21. J.M. Smucker shed $3.20, or 2.9 percent, to $106.31.
ENERGY: Benchmark U.S. crude added 81 cents, or 1.6 percent, to $50.29 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, was down 7 cents to $56.22 a barrel in London.
MARKETS OVERSEAS: In Europe, Germany’s DAX rose 0.1 percent, while the CAC 40 in France added 0.1 percent. The FTSE 100 index of leading British shares was flat. In Asia, Japan’s Nikkei 225 added 0.1 percent and South Korea’s Kospi slipped 0.2 percent. Hong Kong’s Hang Seng index added 0.4 percent. Australia’s S&P/ASX 200 fell 0.1 percent.
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