Fed's mixed signals on next move send Wall Street lower
By Noel Randewich (Reuters) - Wall Street sank on Wednesday as Federal Reserve policymakers gave mixed signals about their next move after cutting interest rates by a quarter of a percentage point in a widely expected move. With continued economic growth and strong hiring 'the most likely outcomes,' the Fed nevertheless cited 'uncertainties' about the outlook and pledged to 'act as appropriate' to sustain the expansion
By Noel Randewich
(Reuters) - Wall Street sank on Wednesday as Federal Reserve policymakers gave mixed signals about their next move after cutting interest rates by a quarter of a percentage point in a widely expected move.
With continued economic growth and strong hiring "the most likely outcomes," the Fed nevertheless cited "uncertainties" about the outlook and pledged to "act as appropriate" to sustain the expansion.
New projections showed policymakers at the median expected rates to stay within the new range through 2020, bad news for investors hoping for additional cuts to help blunt global economic fallout from the U.S.-China trade war.
"The main concern (for stock investors) is there might not be another cut, and that's why you had a little bit of a sell-off," said Alan Lancz, President of Alan B. Lancz and Associates in Toledo, Ohio. "But it's almost like selling on good news. They left the door open for more cuts. It's a really divided Fed right now."
Expectations of lower rates have supported Wall Street's rally this year, with the benchmark S&P 500 <.SPX> up 19% year to date and less than 2% below its record high close in July.
At 3:04 pm EDT (1904 GMT), the Dow Jones Industrial Average <.DJI> was down 0.52% at 26,970.61 points, while the S&P 500 <.SPX> lost 0.62% to 2,986.93.
The Nasdaq Composite <.IXIC> dropped 0.91% to 8,111.67.
Ten of the 11 major S&P sectors were in the red, with the S&P utilities index <.SPLRCU> up 0.3% and alone among gainers. The S&P industrial index <.SPLRCI> fell 1%, leading decliners.
The interest-rate sensitive S&P 500 banks index <.SPXBK> rose 0.5%.
The central bank also widened the gap between the interest it pays banks on excess reserves and the top of its policy rate range, a step taken to smooth out problems in money markets that prompted a market intervention by the New York Fed this week.
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Declining issues outnumbered advancing ones on the NYSE by a 1.98-to-1 ratio; on Nasdaq, a 2.19-to-1 ratio favoured decliners.
The S&P 500 posted 17 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 40 new highs and 31 new lows.
(Additional reporting by Medha Singh and Ambar Warrick in Bengaluru; Editing by Nick Zieminski, David Gregorio and Tom Brown)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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