Stocks Close Modestly Lower Following Afternoon Volatility - U.S. Commentary

(RTTNews) - Stocks saw considerable volatility in afternoon trading on Wednesday before ending the session modestly lower.

The Dow edged down 44.96 points or 0.2 percent to 24,682.31, the Nasdaq slipped 19.02 points or 0.3 percent to 7,345.29 and the S&P 500 dipped 5.01 points or 0.2 percent to 2,711.93.

The lower close on Wall Street came after the Federal Reserve announced its widely anticipated decision to raise interest rates by 25 basis points.

A strong labor market and strength in the broader economy compelled the Fed to raise its benchmark interest rate to a range of 1.5 percent to 1.75 percent.

Perhaps more importantly, the Fed reiterated its plan to raise interest rates gradually. The central bank continues to project three rate hikes in 2018.

Annual inflation "is expected to move up in coming months," the Fed's accompanying statement said, a change from previous comments indicating that inflation would move up "this year.

In a new addition to the Fed's policy statement, the central bank sounded its most optimistic about the U.S. situation, saying, "The economic outlook has strengthened in recent months."

On the U.S. economic front, the National Association of Realtors released a report showing a much bigger than expected increase in existing home sales in the month of February.

NAR said existing home sales jumped by 3.0 percent to an annual rate of 5.54 million in February from a rate of 5.38 million in January. Economists had expected existing home sales to rise by 0.5 percent.

Energy stocks saw substantial strength on the day, benefiting from a continued increase by the price of crude oil. Crude for April delivery spiked $1.63 to $65.17 a barrel.

Gold, steel, and chemical stocks also saw significant strength, while notable weakness was visible among telecom and tobacco stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Hong Kong's Hang Seng Index fell by 0.4 percent, while Australia's S&P ASX 200 Index rose by 0.2 percent. The Japanese markets were closed for a holiday.

The major European markets also ended the day mixed. While the German DAX Index closed just above the unchanged line, the French CAC 40 Index edged down by 0.2 percent and the U.K.'s FTSE 100 Index dipped by 0.3 percent.

In the bond market, treasuries moved to the downside after seeing significant volatility following the Fed decision. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 2.907 percent.

Trading on Thursday may continue to be impacted by reaction to the Fed decision along with reports on weekly jobless claims and leading economic indicators.