Wall Street lower as Fed sets stage for December rate hike

Wall Street stayed weak on Wednesday after the Federal Reserve kept interest rates unchanged but signalled it could hike in December, as equities remained pressured by uncertainty over the impending US elections. The S&P 500 was headed toward its seventh straight session of declines, its longest such streak in about five years.
The US central bank said the economy had gained steam and job gains remained solid, and expressed more optimism that inflation was moving toward its 2 percent target.
It was the last Fed decision before next week's presidential election between Democrat Hillary Clinton and Republican Donald Trump, a race that appears to be increasingly close.
"There's election uncertainty out there as well as the Fed uncertainty," said John Canally, investment strategist and economist for LPL Financial in Boston. "They didn't say they weren't going to tighten in December, but they didn't say they would. They just kind of left it open-ended."
The Dow Jones industrial average fell 52.32 points, or 0.29 percent, to 17,984.78, the S&P 500 lost 11.29 points, or 0.53 percent, to 2,100.43 and the Nasdaq Composite dropped 40.60 points, or 0.79 percent, to 5,112.97.
While discounting a hike at this meeting, traders had before the statement placed the likelihood of a rate increase in December at nearly 75 percent, according to the CME Fedwatch website.
In September, Fed Chair Janet Yellen said that a move before year's end was likely as long as US employment and inflation continued to strengthen. "The Fed continues to inch even closer to a December rate hike as it states that its case for raising rates has strengthened," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
"The market may be wondering if there's enough evidence of a stronger economy to warrant a rate hike versus a belief that Chair Yellen needs to replenish her toolkit in the event of a weakening economic backdrop," Krosby said.
Among sector laggards were utilities, real estate and telecommunications companies, which are high dividend paying groups thought to be vulnerable in rising rate environments.
Energy also lagged, down 1.2 percent, as oil prices fell.
Declining issues outnumbered advancing ones on the NYSE by a 2.51-to-1 ratio; on Nasdaq, a 2.21-to-1 ratio favoured decliners.
The S&P 500 posted 2 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 16 new highs and 134 new lows.