US close: Stocks close lower following Fed's defiance of Trump

US stocks recorded some heavy losses on Wednesday following the Federal Reserve's latest policy announcement.

At the close, the Dow Jones Industrial was 1.49% lower at 23,323.66, while the S&P 500 had lost 1.54% to 2,506.96 and the Nasdaq Composite traded 2.17% lower at 6,636.83.

Stocks turned lower after the US Federal Reserve on Wednesday defied Donald Trump and raised interest rates by 0.25% to a target range of 2.25%-2.5%, but lowered forecasts for future increases.

Estimates showed the Fed was looking at two rate increases in 2019 instead of three as previously expected. Officials now expect economic growth of 2.3% in 2019, down from the 2.5% they anticipated in September.

Fed Chairman Jerome Powell and fellow board members voted unanimously for the rise.

"Information received since the Federal Open Market Committee met in November indicates that the labour market has continued to strengthen and that economic activity has been rising at a strong rate," the Fed said in a statement.

"Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year."

"On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2%. Indicators of longer-term inflation expectations are little changed, on balance."

In other news, West Texas Intermediate was 2.08% higher at $47.20 a barrel and Brent Crude was fetching $57.24 per barrel, a 1.74% increase, and the USD had slipped 0.14% against the GBP to 0.7920 as of 1500 GMT.

In corporate news, General Mills shot up 5.04% in the session as the Cheerios owner's second-quarter profit beat analysts' expectations.

3M inched forward 2.36% after it agreed to buy the technology business of healthcare technology provider M*Modal for an enterprise value of $1bn.

Pfizer was up 1.01% as it agreed to merge its consumer healthcare unit with that of London-listed GlaxoSmithKline.

Eli Lilly picked up 2.39% during the session after the drug maker said 2019 revenue and profit would be ahead of analysts' expectations.

Besides the Fed announcement, US data revealed that US existing home sales increased 1.9% last month from a seasonally adjusted rate of 5.32m in October, according to the National Association of Realtors.

Lawrence Yun, the NAR’s chief economist, said: "The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago. Rising inventory is clearly taming home price appreciation."

The median existing-home price for all housing types rose 4.2% year-on-year in November to $257,700.

Elsewhere, the US current account deficit widened to $124.8bn in the third quarter from a revised $101.2bn for Q2 as imports surged in the third quarter.

The deficit was 2.4% of current GDP in the third quarter, up from the 2% recorded for the previous three-month period, according to the Bureau of Economic Analysis.