By Caroline Valetkevitch
(Reuters) - U.S. stocks ended a choppy session lower on Wednesday after the U.S. Federal Reserve raised interest rates as expected and projected a slightly faster pace of rate hikes this year.
Two more hikes are now expected by the end of this year, compared with one previously.
The central bank, which raised its benchmark overnight lending rate a quarter of a percentage point to a range of between 1.75 percent and 2 percent, also dropped its longstanding pledge to stimulate the economy "for some time."
"The expectation now is for four rate increases in total in 2018. Consensus had been more like three, moving towards four, so I think that's a bit of a surprise," said Katie Nixon, chief investment officer at Northern Trust Wealth Management in Chicago.
"It seems as if the Fed is much more confident now in inflation reaching, in fact maybe breaching a little bit, their target, so they are pulling forward some of the rate increases.”
Fresh projections from policymakers suggested that inflation would run above the Fed's 2 percent target, hitting 2.1 percent this year and remaining there through 2020.
Stocks were volatile after the statement but ended near the lows of the session, and selling was broad-based, with most S&P sector indexes ending lower.
The Dow Jones Industrial Average <.DJI> fell 119.53 points, or 0.47 percent, to 25,201.2, the S&P 500 <.SPX> lost 11.22 points, or 0.40 percent, to 2,775.63 and the Nasdaq Composite <.IXIC> dropped 8.10 points, or 0.11 percent, to 7,695.70.
S&P financials <.SPSY>, which tend to benefit from rising interest rates, ended down 0.3 percent.
"The financials are a bit of a puzzle. There's always a lag between the increases in deposit rates and fund costs and interest on loans," said Robert Eisenbeis, vice chairman and chief monetary economist at Cumberland Advisors in Sarasota, Florida.
"There's some processing and digesting going on."
Traders of U.S. short-term interest-rate futures increased bets the Fed will raise rates again this year and next after the Fed's statement.
A ruling that approved AT&T Inc's
Shares of HBO channel owner Time Warner rose 1.8 percent. AT&T dropped 6.2 percent, sending the S&P telecom services index <.SPLRCL> down 4.5 percent.
After the bell, Comcast Corp
The S&P 500 posted 40 new 52-week highs and two new lows; the Nasdaq Composite recorded 151 new highs and 24 new lows.
(Additional reporting by Lewis Krauskopf in New York and Sruthi Shankar in Bengaluru; Editing by Nick Zieminski and Meredith Mazzilli)
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Updated Date: Jun 14, 2018 03:05 AM