4:05pm: Stocks sink following Fed rate decision
After initially rising on the news of the Fed’s 0.25% interest rate hike, US stocks changed course and were deep in the red at the close.
The S&P 500 was down 1.7% at 3,937 points, the Dow Jones had lost 1.6% at 32,029 points, and the Nasdaq was down 1.6% at 11,670 points at the closing bell.
On the other hand, crude oil rose almost 1% at $70.30 while gold was up 1.8% at $1,976.
2:05pm: Fed's rate increase as expected
The Federal Reserve has raised the interest rate by 0.25% for the second-straight meeting.
The raise was in line with investor expectations and brings the policy rate to a new range of 4.75% to 5%, the highest since October 2007.
In a statement, the FOMC noted that the US banking system was “sound and resilient,” as the sector has recently come under pressure following the collapse of three banks this month.
“The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” it added.
After trading flat for most of the day in the lead-up to the decision, stocks were boosted by the move with the Nasdaq Composite up 0.6%, the S&P 500 up 0.4%, and the Dow Jones Industrial Average up 0.2%.
12:05pm: Stocks flat on expectations of a Federal Reserve 25 basis point rate hike
US stocks were little changed in noon trading as investors braced for the Federal Reserve’s interest rate decision at 2 pm.
At midday, the Dow lost 28 points to 32,533, while the S&P 500 added 2 points at 4,005 and the tech-heavy Nasdaq rose 28 points to 11,888.
“Pretty much every major and minor regional bank, throughout every region of the country, has gone down dramatically in the last week or so. I do think there’s a lot of contractionary things coming,” Spouting Rock Management chief strategist Rhys Williams said.
“Therefore, I think the Fed needs to be mindful of this risk, and look for continuing ways to probably help the economy as opposed to hurt it, over the next quarter or two,” he added.
Notable movers included shares of GameStop Corporation, which soared more than 40% after the videogame retailer swung to its first quarterly profit in two years, posting earnings of $0.16 per share in the period ended January 28, compared to a loss of $0.49 per share a year earlier and easily beating Street expectations of a $0.13 per share loss.
9:46am: Investors wait and see on Fed news
Shortly after the opening bell, the Dow was down 31 points, 0.1%, to 32,529, the Nasdaq Composite fell 19 points, 0.2%, to 11,841 and the S&P 500 lost 5 points, 0.1%, to 3,998.
All eyes are on the Federal Reserve decision scheduled for 2pm ET this afternoon.
“We think the Fed will take that next step, that 25 basis point increase, but probably wrap that in some pretty dovish language to indicate they’re close to the end, if not at the end,” said Neuberger Berman’s Erik Knutzen said on CNBC’s “Closing Bell.” “In a way, it almost doesn’t matter, it’s priced in. What’s most important is the broad liquidity being provided through the Fed’s balance sheet and some of the programs they put in place, the liquidity they provided last week.”
7.30am: Only one show in town
US stock indexes are expected to edge higher in early trading on Wednesday ahead of the latest monetary policy decision from the Federal Reserve, one of its toughest calls in years.
The Fed, which releases its rate decision and economic projections at 2.00pm ET, with chair Jerome Powell to speak at 2.30pm ET, has to weigh up whether to keep raising interest rates to fight high inflation or hold steady amid the worst banking crisis since 2008.
In pre-market trading, futures for the Dow Jones Industrials Average (DJIA) rose 0.2%, while those for the S&P 500 added 0.1%, with contracts for the Nasdaq-100 futures flat.
The main indexes gained on Tuesday as the worst fears about the health of global banks abated. The DJIA closed up 1% at 32,560 points, the S&P 500 added 1.3% at 4,002 points, and the Nasdaq Composite gained 1.6% at 11,860 points.
Richard Hunter, Head of Markets at interactive investor, commented “Easing tensions surrounding the recent banking shocks lifted optimism and in turn markets as investors dipped their toes back into the turbulent waters.
"Further assurances from the US Treasury that they would be ready to provide more deposit guarantees to regional banks lifted the mood, as markets sought to erase some of the more recent losses arising from the general uncertainty of bank prospects."
He added: "Today, however, there is only one show in town as the Federal Reserve announces its latest interest rate decision later. Its decision is delicately poised given recent developments.
"The prospects for a 0.5% hike which were largely expected just two weeks ago seem to have evaporated. In contrast, thoughts from earlier in the week that the Fed could pause its hiking cycle given the backdrop could have a negative impact on sentiment, since it might signal that the central bank is aware of more bank developments to come which would reintroduce investor jitters on a large scale.
"At the same time, inflation remains persistent and with other measures already taken to stem the potential of a banking crisis, the Fed could revert its focus to more recent economic data which is suggesting that the economy may be beginning to slow as desired.
"The compromise – and by far the most expected outcome from today – is a rise of 0.25%."