NEW YORK (AP) — Stocks gave up a big rally and took a dive in afternoon trading Wednesday after the Federal Reserve raised interest rates again and signaled it’s likely to keep raising them next year. The market finished at its lowest level since September 2017.
The U.S. central bank said it expects to increase interest rates at a slightly slower pace next year, and also said it isn’t planning any changes in the gradual shrinking of its large bond portfolio. But investors appeared to hope the Fed would unveil a sharper slowdown in interest rate hikes and other credit tightening policies because economic growth is likely to slow down.
The Dow Jones Industrial Average swung from a gain of 381 points right before the Fed’s decision was announced at 2 p.m. Eastern time to a closing loss of 351 points. The index is down almost 9 percent in December.
The rate increase, to a range of 2.25 percent to 2.5 percent, was the Fed’s fourth this year. Its benchmark interest rate is at its highest point since 2008, which means higher borrowing costs for many consumers and businesses.
Bond prices rose, sending yields sharply lower. The yield on the 10-year Treasury note fell to 2.77 percent from 2.84 percent immediately before the Fed’s announcement and 2.82 late Tuesday. That’s a substantial move for that benchmark lending rate. Bonds yields are benchmarks for many kinds of long-term loans including mortgages.
The Fed is now forecasting two increases in rates in 2019 instead of three. The central bank expects the long-term level of its main interest rate will be 2.8 percent, down from an earlier projection of 3 percent.
The yo-yo movements for the stock market were a result of markets trying to parse Fed Chairman Jerome Powell’s comments, which essentially were: The economy is strong enough to warrant a rate increase now, but not so strong to need three rate increases, as the Fed had indicated a few months ago.
“Chairman Powell was threading the needle today,” said Frances Donald, head of macroeconomic strategy at Manulife Asset Management. “He had to say that the economic picture is not as good as three months ago, while also saying that the pillars of the economy remain intact. And markets have to react, live, to that ‘on the one hand, on the other hand’ that Powell has to play in this economy.”
But Powell may have failed to smooth the market’s key anxieties. They fear that continued increases in interest rates will slow the economy too dramatically. They’re also concerned about the trade dispute between the U.S. and China, which threatens economic growth and corporate profits.
Internet, technology and consumer-focused companies dropped. Facebook fell sharply after the New York Times reported that the social media network gave companies more access to users’ personal data than it has previously said. The report said Facebook had arrangements with more than 150 companies including Microsoft, Amazon, Spotify and Netflix that some companies read, write and delete users’ private messages or see the names of a user’s friends or their news feeds without their consent.
Separately, the District of Columbia sued Facebook for allowing Cambridge Analytica, a data-mining firm working for the Trump campaign, to improperly access data from as many as 87 million Facebook users.
Facebook lost 7.2 percent to $133.25. It’s down 39 percent since late July on concerns about a slowdown in user growth, multiple privacy and safety scandals, as well as the possibility of increased regulation in the future.
FedEx plunged after saying international shipping, especially in Europe, fell in the latest quarter. FedEx also said the U.S.-China trade dispute is affecting its business. The shipping company posted a smaller profit than analysts expected and said it will cut spending and offer buyouts to some workers to help make up for the shaky results.
FedEx stock lost 12.2 percent to $162.51. It has dropped 35 percent this year. Rival UPS lost 3 percent to $94.32 and has slumped 21 percent in 2018.
The Dow fell 1.5 percent to 23,323.66. The S&P 500 skidded 39.20 points, or 1.5 percent, to 2,506.96. It’s tumbled 14.5 percent in the last three months, including a loss of 9.2 percent so far in December.
The Nasdaq composite gave up 147.08 points, or 2.2 percent, to 6,636.83. The Russell 2000 index, which has suffered broader declines than the rest of the market, fell 27.95 points, or 2 percent, to 1,349.23.
Despite the losses, David Kelly, the chief global strategist for JPMorgan Funds, said the market will ultimately react to the health of the economy. He said the Fed’s moves Wednesday made sense and could prolong the already long-lasting growth in the U.S.
“The Fed behaving in a very prudent, balanced way increases the possibility of a very balanced expansion” continuing, he said.
Oil prices turned higher after plunging a day earlier on worries about rising supplies and weakening global growth, which could weigh on demand.
Benchmark U.S. crude climbed 2.1 percent to $47.20 a barrel in New York. It dropped 7 percent Tuesday and closed at a 16-month low, and has fallen almost 40 percent since Oct. 3. Brent crude, used to price international oils, rose 1.7 percent to $57.24 a barrel in London.
Wholesale gasoline rose 2.7 percent to $1.39 a gallon and heating oil added 2.9 percent to $1.81 a gallon. Natural gas lost 2.9 percent to $3.73 per 1,000 cubic feet.
Energy company stocks fell again. They’re trading at their lowest levels since early 2016.
The dollar was down for the day and recovered slightly after the Fed’s move. The dollar slipped to 112.36 yen from 112.53 yen. The euro rose to $1.1368 from $1.1357 and the British pound dipped to $1.2621 from $1.2639.
European stocks rose after Italy’s government reached an agreement with the European Commission on its budget plans. The Italian FTSE MIB jumped 1.6 percent. Britain’s FTSE 100 rose 1 percent while Germany’s DAX added 0.2 percent and the CAC 40 in France rose 0.5 percent.
Japan’s Nikkei 225 index fell 0.6 percent and while South Korea’s Kospi rose 0.8 percent. Hong Kong’s Hang Seng was 0.2 percent higher.
Gold rose 0.2 percent to $1,256.40 an ounce. Silver added 0.8 percent to $14.82 an ounce. Copper climbed 1.9 percent to $2.72 a pound.
Business Writer Stan Choe contributed to this story from New York
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP
Will America-First News Outlets Make it to 2023?
Things are looking grim for conservative and populist news sites.
There’s something happening behind the scenes at several popular conservative news outlets. 2021 was bad, but 2022 is proving to be disastrous for news sites that aren’t “playing ball” with the corporate media narrative. It’s being said that advertisers are cracking down, forcing some of the biggest ad networks like Google and Yahoo to pull their inventory from conservative outlets. This has had two major effects. First, it has cooled most conservative outlets from discussing “taboo” topics like Pandemic Panic Theater, voter fraud, or The Great Reset. Second, it has isolated those ad networks that aren’t playing ball.
Certain topics are anathema for most ad networks. Speaking out against vaccines or vaccine mandates is a certain path to being demonetized. Highlighting voter fraud in the 2020 and future elections is another instant advertising death penalty. Throw in truthful stories about climate change hysteria, Critical Race Theory, and the border crisis and it’s easy to understand how difficult it is for America-First news outlets to spread the facts, share conservative opinions, and still pay the bills.
Without naming names, I have been told of several news outlets who have been forced to either consolidate with larger organizations or who have backed down on covering certain topics out of fear of being “canceled” by the ad networks. I get it. This is a business for many of us and it’s not very profitable. Those of us who do this for a living are often barely squeaking by, so loss of additional revenue can often mean being forced to make cuts. That means not being able to cover the topics properly. Its a Catch-22: Tell the truth and lose the money necessary to keep telling the truth, or avoid the truth and make enough money to survive. Those who have chosen survival simply aren’t able to spread the truth properly.
We will never avoid the truth. The Lord will provide if it is His will. Our job is simply to share the facts, spread the Gospel, and educate as many Americans as possible while exposing the forces of evil.
To those who have the means, we ask that you please donate. We have options available now, but there is no telling when those options will cancel us. We have our GivingFuel page. There have been many who have been canceled by PayPal, but for now it’s still an option. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
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