Mar­ket falls af­ter rate hike

In­vestors sell stocks that the jump would hurt, and the dol­lar’s value goes up.

The Denver Post - - BUSINESS - By Stan Choe

Stocks had their worst day in two months af­ter the Fed­eral Re­serve raised in­ter­est rates Wed­nes­day on the back of a strength­en­ing job mar­ket and sur­prised in­vestors by in­creas­ing its fore­cast for rate hikes next year. The dol­lar’s value jumped against other cur­ren­cies, and bond yields climbed to their high­est levels in years.

The rate in­crease, which was only the Fed’s sec­ond in the last decade, was widely ex­pected across the mar­ket. But in­vestors were sur­prised to see the Fed pro­ject three more in­creases for 2017, up from a prior fore­cast of two. Higher rates can slow cor­po­rate prof­its and eco­nomic growth.

The Stan­dard & Poor’s 500 in­dex fell 18.44 points, or 0.8 per­cent, to 2,253.28, its big­gest per­cent­age loss since mid-Oc­to­ber. The Dow Jones in­dus­trial av­er­age fell 118.68 points, or 0.6 per­cent, to 19,792.53. The Nas­daq com­pos­ite fell 27.16, or 0.5 per­cent, to 5,436.67.

The yield on the 10-year Trea­sury note touched its high­est level in more than two years and sat at 2.57 per­cent late Wed­nes­day, up sharply from 2.47 per­cent a day ear­lier.

In­vestors re­acted to the Fed’s an­nounce­ment Wed­nes­day by sell­ing stocks that would be most hurt by higher in­ter­est rates.

Util­ity stocks in the S&P 500 fell 2 per­cent, and real-es­tate stocks fell 1.9 per­cent.

En­ergy stocks had the sharpest de­clines among the 11 sec­tors that make up the S&P 500 and fell 2.1 per­cent, drop­ping along with the price of oil. Bench­mark U.S. crude fell $1.94 to set­tle at $51.04 per bar­rel in New York. Brent crude, the in­ter­na­tional stan­dard, lost $1.82 to $53.90 a bar­rel in Lon­don.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.