After wobbling, stocks end down
After a jittery day of trading, major U.S. stock indexes ended down 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 rose early in the day and jumped after the Fed announced its decision. The Dow Jones industrial average climbed 250 points but erased that whole gain as new Fed Chairman Jerome H. Powell addressed reporters. The dollar weakened, and bond yields fell.
Small and midsize firms climbed. Energy companies led the way as oil prices jumped. Home builders rose after a report that sales of previously occupied homes increased in February. Airlines skidded after Southwest said its revenue is suffering as it cuts fares to compete. Cereal and packaged-foods firms slumped.
Bond prices edged down. The yield on the 10-year Treasury note declined to 2.88% from 2.90%.
David Kelly, chief global strategist for JPMorgan Asset Management, said stocks usually do well when interest 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 now, but with a key difference: The economy has been growing for almost a decade, and rates have been historically low that whole time.
Kelly said the Fed and the government must take care 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 10 biggest gainers in the Standard & Poor’s 500 were energy firms.
Benchmark U.S. crude rose $1.63, or 2.6%, to $65.17 a barrel. Brent crude rose $2.05, or 3%, to $69.47 a barrel.
General Mills — the maker of Cheerios cereal, Yoplait yogurt and other packaged foods — plunged 8.9% to $45.51 after it said rising freight and commodity costs hurt its quarterly results. It also cut its annual profit outlook.
Facebook erased early losses, ending the day up 0.7% at $169.39. Social media companies Twitter and Snap also regained a portion of their recent losses.
MuleSoft climbed 5.3% to $44.24 after the software developer agreed to be bought by Salesforce.com for $44.89 a share, or $5.9 billion. Salesforce fell 2.7% to $121.70.
Wholesale gasoline rose 5 cents to $2.01 a gallon. Heating oil rose 5 cents to $2 a gallon. Natural gas fell 4 cents to $2.64 per 1,000 cubic feet.
Gold rose $9.60 to $1,321.50 an ounce. Silver jumped 23 cents, or 1.4%, to $16.42 an ounce. Copper rose 2 cents to $3.06 a pound.
The dollar fell to 106.10 yen from 106.46 yen. The euro rose to $1.2332 from $1.2253.