Wall St. ends mixed as financials drag after Fed increases rates

NEW YORK — The S&P 500 ended slightly lower on Wednesday pressured by the financial sector after the Federal Reserve announced an interest rate hike but kept its rate outlook for coming years even as it projected faster US economic growth.

The quarter-percentage-point rise in the overnight lending rate, which marked the third hike this year, came along with an increase to the Fed’s 2018 gross domestic product growth forecast to 2.50% from 2.10%.

The Dow and the Nasdaq ended higher but the S&P could not sustain gains in choppy trading after the Fed statement.

The S& P was dragged lower by a late-session tumble in bank stocks, which tend to get a profit boost from higher interest rates.

The financial sector’s 1.30% drop for the day suggested, however, that investors may have expected a more hawkish Fed.

“It’s a fairly dovish statement which is positive for risk assets,” said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia.

“Always the worry with the market is if the Fed pushes back too hard and takes away the punch bowl. It just doesn’t seem that they’re setting the table for that at all,” he said.

The Dow Jones Industrial Average rose 80.63 points, or 0.33%, to end at 24,585.43, the S&P 500 lost 1.26 points, or 0.05%, to 2,662.85 and the Nasdaq Composite added 13.48 points, or 0.20%, to 6,875.80.

The consumer staples sector was the strongest of the S&P’s 11 sectors with a 0.50% gain. The S&P utilities sector pared gains after hitting a session high to end up 0.30%.

Investors were also watching progress in the push for a US tax law overhaul that would involve a corporate tax cut. Shortly before the Fed news, congressional Republicans said they reached a deal on tax legislation and US President Donald Trump said he would back a 21% corporate tax rate.

Advancing issues outnumbered declining ones on NYSE by 1.27 to one; on Nasdaq, a 1.61-to-1 ratio favored advancers. Volume on US exchanges was 6.77 billion shares, compared to the 6.53 billion average for the full session over the last 20 trading days. —