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Wall Street gains evaporate, S&P 500 ends lower on Fed tightening timeline

Stock Markets Jan 26, 2022 07:57PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 25, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) - The S&P 500 ended lower on Wednesday, taking an abrupt nosedive that reversed earlier solid gains after the U.S. Federal Reserve released its statement at the conclusion of its two-day policy meeting.

All three major U.S. stock indexes gyrated wildly in the final minutes of a session that ended with the Dow joining the S&P in negative territory and the Nasdaq eking out a nominal gain.

The indexes enjoyed a brief surge after the Federal Open Markets Committee left key interest rates near zero. But those gains quickly evaporated as the Fed statement warned it would soon begin raising the Fed Funds target rate to combat persistent inflation related to the COVID-hobbled supply chain.

"With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the statement said.

Stocks slid into negative territory once Fed Chairman Jerome Powell's subsequent Q&A got under way, during which he warned that inflation remains above its long-run goal and supply problems are bigger and more long-lasting than previously thought.

"When reporters asked Powell if the Fed would consider raising rates at every meeting, which would mean more than four times this year, he didn’t say they wouldn’t, which indicates a flexibility to raise rates much more quickly (if necessary) than anyone was expecting," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

The Dow Jones Industrial Average fell 129.64 points, or 0.38%, to 34,168.09, the S&P 500 lost 6.52 points, or 0.15%, to 4,349.93 and the Nasdaq Composite added 2.82 points, or 0.02%, to 13,542.12.

While all 11 major sectors of the S&P 500 spent much of the trading day green, by the time the dust settled only tech and financials showed gains.

Fourth-quarter reporting season has hit full stride, with one-fifth of the companies in the S&P 500 having posted results. Of those, 81% have beaten consensus, according to Refinitiv data.

Microsoft Corp (NASDAQ:MSFT) gained 2.8% after current-quarter revenue guidance, driven in part by its cloud business, came in above consensus.

Boeing (NYSE:BA) Co was down 4.8% after the plane maker said it incurred $4.5 billion in charges in the fourth quarter related to its sidelined 787.

Toy maker Mattel Inc (NASDAQ:MAT) jumped 4.3% after regaining the right from rival Hasbro Inc (NASDAQ:HAS) to produce toys based on Walt Disney (NYSE:DIS) Co's "Frozen" franchise.

Shares of Tesla (NASDAQ:TSLA) fell about 5% in extended trade after the electric vehicle maker warned that its factories would run below capacity through 2022 due to supply-chain limitations.

Declining issues outnumbered advancing ones on the NYSE by a 2.12-to-1 ratio; on Nasdaq, a 1.98-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 28 new highs and 206 new lows.

Volume on U.S. exchanges was 14.50 billion shares, compared with the 11.58 billion average over the last 20 trading days.

Wall Street gains evaporate, S&P 500 ends lower on Fed tightening timeline
 

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Comments (50)
Adam Paine
Adam Paine Jan 27, 2022 2:30AM ET
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no action is bad policy
Ricky Singh
Ricky Singh Jan 26, 2022 10:29PM ET
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Bring back “ The Orange “
Usama Mohamed
Usama Mohamed Jan 26, 2022 9:06PM ET
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someone tell me, why micro soft shares went up
Massine Fariss
Massine Fariss Jan 26, 2022 9:06PM ET
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Earnings beat / better forcast for next quarter
Dave Jones
Dave Jones Jan 26, 2022 6:46PM ET
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how many times do they have to change the story throughout the day and wheel out some other shill to support the narrative of the moment?
Roberto Baggio
Roberto Baggio Jan 26, 2022 3:49PM ET
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expectation = 0,25%x4 installments, powell = march 0.25% for sure, maybe more, maybe more later... goodbye dow nasdaq s&p
Stan Smith
Stan Smith Jan 26, 2022 3:27PM ET
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Roar then Retreat as quick as you can...lol
Mitchel Pioneer
Mitchel Pioneer Jan 26, 2022 2:01PM ET
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Get ready for the fraud and criminal manipulation to go pedal to the metal at 2PM.  Over 1,700 points in losses magically saved Monday and Tuesday, and more losses criminally removed from the system today.  The FRAUD in "late trade" is imminent.
Archit jain
Archit jain Jan 26, 2022 1:50PM ET
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Okaycan I listen live fed policy.I am from India
Nishkarsh Sharma
Nishkarsh Sharma Jan 26, 2022 1:50PM ET
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chart reveals everything don't be bother all will be good for india. nifty will zoom tomorrow
Nishkarsh Sharma
Nishkarsh Sharma Jan 26, 2022 1:50PM ET
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always remember market knows everything.
dixit patel
dixit patel Jan 26, 2022 1:50PM ET
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hope
dixit patel
dixit patel Jan 26, 2022 1:50PM ET
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hope
Rakesh Valecha
Rakesh Valecha Jan 26, 2022 1:50PM ET
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actually FI's are already selling in india because they want exit...and dii's are buying.. because they know the game..so no worries for indian stocks..it is very cheap according to the valuation
Kyle Oliver
Kyle Oliver Jan 26, 2022 1:48PM ET
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We will see what happens in 13 minutes
Ivan Ovchinnikov
Ivan Ovchinnikov Jan 26, 2022 1:41PM ET
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We will see what happens in 19 minutes.
 
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