Stocks wobble, end lower after Fed raises rates

NEW YORK — After a jittery afternoon of trading, major U.S. stock indexes fell Wednesday while smaller companies fared better. The Federal Reserve raised interest rates, as investors expected, and said it could raise rates at a quicker pace next year.

Stocks traded higher early in the day and jumped after the Fed announced its decision. The Dow Jones industrial average climbed 250 points, but gave it all up as new Fed Chairman Jerome Powell addressed reporters. At the end of trading it wobbled and ended lower. The dollar weakened and bond yields turned lower. Yields had risen earlier in the afternoon.

Small and mid-size companies climbed. Energy companies led the way as oil prices jumped for the second day in a row. Homebuilders advanced following a report that sales of previously occupied homes increased in February. Cereal and packaged foods companies slumped after General Mills reported rising expenses and cut its annual profit forecast, and airlines skidded after Southwest said its revenue is suffering as it cuts fares to compete with other companies.

Bond prices edged lower. The yield on the 10-year Treasury note declined to 2.88 percent from 2.90 percent Tuesday. It had risen as high as 2.93 percent as investors expected quicker gains in interest rates.

David Kelly, the chief global strategist for JPMorgan Asset Management, said stocks usually do well when rates are rising, but only up to a point.

“If interest rates are rising from a low level, there’s more optimism about the economy, and that generally is a more positive thing,” he said.

That’s the case right now, but with an important difference: The economy has been growing for almost a decade, and inter-

est rates have been historically low for the whole time.

Kelly added that the Fed and the government need to be careful to focus on smooth growth, as the recent tax cuts will dump some short-lived stimulus into the economy.

“The overall effect of the tax cut is to deliver another keg to a keg party at 2 a.m.,” he said. “The party is probably going to go a little longer but the hangover is going to be worse.”

Nine of the ten biggest gainers on the S&P 500 were energy companies. Some of the biggest gains went to Marathon Oil and Anadarko Petroleum.

Benchmark U.S. crude rose $1.63, or 2.6 percent, to $65.17 a barrel in New York. Brent crude, used to price international oils, added $2.05, or 3 percent, to $69.47 a barrel in London.

General Mills, the maker of Cheerios cereal, Yoplait yogurt and other packaged foods, plunged after its third-quarter results were hurt by rising freight and commodity costs. The company also cut its annual profit outlook. The stock dropped $4.42, or 8.9 percent, to $45.51, and companies including Kellogg, J.M. Smucker and Post Holdings also fell.

After early losses, Facebook rose $1.24 to $169.39. The stock fell 9 percent Monday and Tuesday following reports a data mining firm working for President Donald Trump’s campaign took data from the accounts of 50 million Facebook users without their permission. Authorities in Britain and the U.S. launched investigations into Facebook’s handling of user data.

Facebook stock is down 12.5 percent from the alltime high it set Feb. 1.