U.S. stocks sold off late in the day and ended broadly lower Wednesday after the head of the Federal Reserve appeared to play down the possibility of an interest rate cut this year, something some investors had been hoping for.
The Fed’s decision to leave its benchmark interest rate alone was widely expected and came amid signs of renewed economic health, but unusually low inflation. The announcement reaffirmed a message that has reassured investors since the start of the year: No rate hikes are likely anytime soon.
The low-rate policy is helping to keep borrowing costs down and supporting an economy that’s been growing steadily since late last year.
The S&P 500 index fell 22.10 points, or 0.8%, to 2,923.73.
The Dow Jones Industrial Average lost 162.77 points, or 0.6%, to 26,430.14. The Nasdaq composite dropped 45.75 points, or 0.6%, to 8,049.64. The Russell 2000 index of smaller company stocks gave up 14.83 points, or 0.9%, to 1,576.38.
The U.S. stock market has been riding high this year as it’s made its way back from a nosedive at the end of 2018. The Fed spurred the market’s recovery earlier this year when it signaled it would take a patient approach to raising interest rates.
Soon after the Fed issued its statement, stock prices rose modestly. The yield on the 10-year Treasury note, which influences mortgages and other loans, fell slightly.
But the trajectory for stocks and bonds changed course as Fed Chairman Jerome Powell fielded questions from reporters at a press conference Wednesday. At one point, he declined to say whether some investors are misguided in expecting the U.S. central bank to trim interest rates this year.
“The committee is comfortable with our current policy stance,” Powell said.
The U.S. dollar spiked versus other currencies as Powell spoke. Bond prices ended up little changed, with the yield on the 10-year Treasury note holding at 2.50%.
Household goods makers, banks and energy companies took some of the heaviest losses Wednesday. Only real estate stocks eked out a slight gain.
Stocks had been moving sideways right before the Fed’s announcement. They rallied earlier in the day as large U.S. companies continued to surprise investors with solid profits.
Apple rose 4.9% after its first quarter results beat Wall Street forecasts. The electronics giant’s sales are still shrinking as iPhone demand weakens, however. Still, Apple raised its dividend.
CVS Health climbed 5.4% after the company reported a 42% surge in quarterly profits. It also raised its profit forecast for the year.
Earnings reporting season is more than a third of the way through and the results have been tempering investors’ worst fears about a severe profit slump. Earnings are down about 0.3% so far for S&P 500 companies.
Energy futures finished mostly higher. Benchmark U.S. crude fell 0.5% to settle at $63.60 per barrel. Brent crude added 0.2% to close at $72.18 per barrel.
Wholesale gasoline inched 0.1% lower to $2.06 per gallon. Heating oil rose 0.8% to $2.09 per gallon. Natural gas added 1.7% to $2.62 per 1,000 cubic feet.
Gold dropped 0.1% to $1,284.20 per ounce, silver fell 1.7% to $14.73 per ounce and copper slid 3.5% to $2.80 per pound.
The dollar rose to 111.61