Stocks wobble and end lower after Fed raises interest rates

24 March 2018, 12:35 | Andres Norman

Stocks Close Lower As Fed's Comments Spark Turbulence

Fed moves to prevent US economy from overheating

"Fiscal policy has become more stimulative".

Stocks greeted the Fed's interest-rate increase with volatile trading Wednesday, as the central bank delivered the expected hike but Chairman Jerome Powell gave the market some angst. The markets may have heaved a sigh of relief knowing that the dot plot, as it is called, for 2018 remained unchanged at three rate hikes. "People are buying more shoes, but higher rates do pose a challenge for footwear companies, which need loans to expand and grow because it will now cost them more to borrow".

In December, the Fed predicted U.S. gross domestic product (GDP) to grow 2.5 percent this year, 2.1 percent in 2019 and two percent in 2020.

The US dollar extended losses in Asia yesterday after the Fed stuck to its target for interest rate hikes this year, but fresh fears of a trade war hit equity markets as US President Donald Trump prepared fresh sanctions on China.

Powell justified the Fed keeping its inflation forecast the same by noting that price pressures have been weak for years.

The revisions will have an effect on the Fed's path of gradual normalization of monetary policy, including the number of envisaged interest rate hikes. Unemployment is now anticipated to fall to 3.8 percent this year and 3.6 percent in 2019, which would be the lowest level since 1969.

Some analysts say a short-term economic stimulus from Congress - in the form of a $1.5 trillion tax cut and federal spending increases - could eventually push the Fed to add a fourth rate move.

"The economic outlook has strengthened in recent months", the Fed said in a statement.

Summit offers hope to son of American held in North Korea
Kim and Moon have made major steps to reduce tensions that reached dangerously high levels a year ago . The commentary called on all parties involved to act with "prudence, self-control and patience".

Govt verified facts about 39 Indians in Iraq
Of the 40 Indians, Harjit Masih from Gurdaspur had managed to escape and had claimed to have witnessed the massacre of the others. He added that he was brought back to India within weeks of the shootout, but was "released" by the government months later.

Courtois a 'great goalkeeper' despite Barca errors, says Alonso
Messi scored three goals and made another in the two-legged last-16 tie, which Barcelona won 4-1 on aggregate. Meanwhile, Messi was quick to praise his team-mates despite having a decisive say in Barca's triumph.

But a host of factors, including the massive tax cuts enacted by Congress, a weaker dollar and robust job creation, suggest that the Fed is likely to adopt a more hawkish policy stance.

"I read this as the Fed is still having trouble rectifying moderate growth and subdued inflation", said economist Lindsey Piegza of Stifel. My take is this: The Fed is going to raise rates at least 1½ but more likely 1¾ percentage points between now and the end of 2019.

The Fed has said it expects to raise interest rates a total of three times this year, and one of the key debates on Wall Street is whether it will wind up increasing rates three times or four.

The Federal Reserve is sticking to a cautious strategy on raising interest rates in 2018, but some officials left scattered hints they are more anxious about rising inflation than the central bank let on.

Similarly, inflation expectations also shifted slightly.

Credit card debt is at a record high in the USA, totalling more than $1 trillion in 2017.

That increased optimism appears to downplay lingering uncertainties in the recovery, including structural issues such as a ballooning debt load and trade barriers that could turn the economy's tail winds back into head winds. In December, it raised this rate to between 1.25% and 1.5%.

According to Krungsri Securities, the gains the SET Index logged for most of the session yesterday were also driven by export growth of 10.3 per cent year on year in February, a historic high that month in the number of tourist arrivals at 3.56 million, and increases in global crude oil prices after a 2.6-million-barrel reduction in United States crude stocks.

Other News

Trending Now

United to use special tags after dog death
A Texas district attorney is investigating the death of a puppy on a United Airlines flight as a possible criminal offense. Alaska Airlines carried nearly 115,000 animals past year and reported just two deaths and one lost animal, the data show.

Israeli stabbed in Jerusalem's Old City, attacker shot dead
The spokesperson for the IOF announced on Sunday that Israeli forces had sealed off two Hamas tunnels late Saturday night. The statement added that it did not expect a Hamas retaliation for the demolition of the tunnels.

Netanyahu says policy to impede enemies from nuclear weapons
Bergman agrees there are similarities between what happened then and Iran's attempts today to embed its forces in Syria. Concerns over Iran's nuclear and military ambitions have long dominated Netanyahu's rhetoric on the worldwide stage.

Cambridge Analytica: Warrant sought to inspect company
Therrien says his ultimate goal is to ensure that the privacy rights of Canadian Facebook users are protected. Facebook first learned of the breach more than two years ago, but hasn't disclosed it until now.

Jim Carrey Criticized for Portrait of Sarah Huckabee Sanders
He's famous for his movies and comedic flair, but Jim Carrey has a new vocation: making political art. Mike Huckabee (R), tore into Carrey for his post, calling him a "Christaphobe".

Bill Hader Reprises Role of Stefon on Saturday Night Live
Meanwhile, his assistant who complained he was a "bit forward", also resigned, "because I was so sorry at how it all turned out". This included Kate McKinnon playing Jeff Sessions , who had to bemoan taking away the pension from a "Christian white".

Stranger Things stars reportedly land big pay raises
Stranger Things Season 3 is slated to start filming on April 23, but it may not premiere until 2019 . The kids in the '80s-set show are getting their fair share of salary thrills and chills as well.

Jay-Z and Beyonce coming to Ohio Stadium during concert tour
The mother of 3 was seen wearing fishnet stockings and pink boots, while holding on to JAY-Z who was at the wheel. Now it seems that the husband and wife might have more in store, even if it isn't clear what.

Streaming on YouTube is now as simple as pressing a button
With 159 million monthly active users, 88 million people around the world use the service's free, ad-supported service. According to Cohen, a YouTube music service is in development to compete directly with Apple Music and Spotify .

Dairy Queen to give away ice cream on Free Cone Day
Kelly Tyko is a columnist for Treasure Coast Newspapers and , part of the USA TODAY NETWORK. Each year, Rita's marks the arrival of spring by giving away a free Italian ice to every guest.