US stocks fall further after Fed rate hike

NEW YORK: Wall Street stocks fell sharply on Wednesday after the Federal Reserve lifted interest rates while pledging a cautious approach to additional rate hikes next year.

After choppy trading in the first 45 minutes following the 1900 GMT announcement, stocks turned decisively downward during a news conference with Fed Chair Jerome Powell.

Near 2025 GMT, the Dow Jones Industrial Average was down 1.3 percent at 23,364.27.

The broad-based S&P 500 shed 1.4 percent to 2,511.18, while the tech-rich Nasdaq Composite Index tumbled 1.9 percent to 6,653.62.

All three indices were up about one percent shortly before the Fed announcement.

The Fed, as expected, raised the target range by 0.25 point, with 2.5 percent at the high end, while signaling that it will slow down somewhat on additional increases as it watches the economy.

The Fed's current projections now project only two interest rate increases, down from three previously.

Powell said the Fed would not shift course on its path of reducing the central bank's balance sheet. Some analysts thought Powell could signal flexibility on that measure.

Heading into the announcement, many analysts had expected a "dovish" interest rate increase paired with strong verbal cues that the central bank would not tighten excessively in a period when global stocks have retreated amid concerns over slowing growth and trade wars.

But Joe Manimbo, analyst at Western Union Business Solutions, said "the Fed is coming across as more neutral than dovish," strengthening the dollar.

The euro fell to $1.1378 compared with $1.1434 shortly before the Fed decision.