US close: Stocks finish higher as Fed hikes interest rates
US equity markets finished higher on Wednesday, after the Federal Reserve tightened policy but left its so-called 'dot-plot' graph largely unchanged, triggering a sharp rally in government bond markets.
The Dow Jones Industrial Average was up 0.54% to 20,950.10, the S&P 500 rose 0.84% to 2,385.26 and the Nasdaq 100 was 0.63% firmer at 5,416.24.
As expected by economists, raising the target range for the Fed funds rate by 25 basis points to between 0.75% and 1.0%.
In a surprise move, however, Minneapolis Fed president Neil Kashkari dissented from the rest of the Federal Open Market Committee, instead casting his ballot in favour of keeping the target range for the Fed funds rate unchanged.
In its policy statement, the Fed described job gains as "solid" and said inflation had moved close to the Committee's 2% longer-run objective, although it was aiming for a sustained rise to that level.
For Tom Stevenson, investment director for personal investing at Fidelity International, the Fed was "clearly erring on the side of caution".
"The dot plot is pretty much unmoved but we do seem to have a bit more consensus around rates in 2019.
“Of note, Neel Kashkari didn't think rates should rise yet, which highlights there are still meaningful doubts about just how quickly and how far the Fed should raise rates in this cycle.”
Stevenson said that case was simply based on a lack of wage growth, which holds back inflation.
Ahead of the rate announcement, investors had been met by a raft of economic releases.
The consumer price index rose 0.1% in February, in line with expectations month-on-month and was 2.7% higher on an annualised basis - a five-year high.
Retail sales increased 0.1% as expected in February month-on-month, to $473.99bn and 5.7% higher from last year.
The National Association of Home Builders/Wells Fargo housing market index rose to 71 in March from 65 the month earlier, beating expectations for an unchanged reading.
The component gauging current sales conditions increased seven points to 78, while the index charting sales expectations in the next six months rose five points to 78 and buyer traffic was up eight points to 54.
The New York Empire State manufacturing index fell to 16.4 in March from 18.7 in February, marginally above the 15.0 consensus forecast.
On the corporate front, shipping company Golden Ocean Group rallied 10.26% after it said it successfully completed its $60m share offering.
Twitter was down 1.89% after at least dozens of prominent accounts were hacked early in the day.
Shares in AT&T were up 1.19% after the European Commission approved its $85bn acquisition of Time Warner, which was up 0.4%.
Dow Jones - Risers
Caterpillar Inc. (CAT) $93.31 1.63%
Unitedhealth Group Inc. (UNH) $171.78 1.61%
Verizon Communications Inc. (VZ) $50.14 1.58%
Johnson & Johnson (JNJ) $128.96 1.50%
Chevron Corp. (CVX) $108.84 1.42%
E.I. du Pont de Nemours and Co. (DD) $81.48 1.33%
Exxon Mobil Corp. (XOM) $82.00 1.25%
Pfizer Inc. (PFE) $34.62 1.20%
United Technologies Corp. (UTX) $113.07 1.12%
Apple Inc. (AAPL) $140.46 1.06%
Dow Jones - Fallers
American Express Co. (AXP) $79.23 -0.58%
Walt Disney Co. (DIS) $111.87 -0.39%
Goldman Sachs Group Inc. (GS) $246.78 -0.38%
Intel Corp. (INTC) $35.10 -0.23%
Wal-Mart Stores Inc. (WMT) $70.54 -0.20%
Boeing Co. (BA) $178.71 -0.01%
International Business Machines Corp. (IBM) $175.81 0.05%
McDonald's Corp. (MCD) $127.88 0.06%
JP Morgan Chase & Co. (JPM) $91.73 0.24%
Travelers Company Inc. (TRV) $122.96 0.30%
S&P 500 - Risers
Southwestern Energy Co. (SWN) $7.81 5.83%
United States Steel Corp. (X) $37.58 5.43%
Newmont Mining Corp. (NEM) $34.10 5.25%
Freeport-McMoRan Inc (FCX) $12.89 5.05%
Harley-Davidson Inc. (HOG) $62.94 4.73%
Diamond Offshore Drilling Inc. (DO) $15.38 4.63%
Transocean Ltd. (RIG) $12.98 4.59%
Nucor Corp. (NUE) $63.45 4.48%
Hess Corp. (HES) $49.15 4.20%
Chesapeake Energy Corp. (CHK) $5.45 4.01%
S&P 500 - Fallers
Macy's Inc. (M) $30.32 -2.04%
Capital One Financial Corp. (COF) $89.91 -1.99%
AutoZone Inc. (AZO) $715.91 -1.74%
O'Reilly Automotive Inc. (ORLY) $270.71 -1.70%
Discover Financial Services (DFS) $70.61 -1.63%
M&T Bank Corp. (MTB) $163.75 -1.33%
SunTrust Banks Inc. (STI) $57.91 -1.24%
Express Scripts Holding Co (ESRX) $66.06 -1.17%
Fifth Third Bancorp (FITB) $26.45 -1.12%
Citizens Financial Group, Inc. (CFG) $36.78 -1.10%
Nasdaq 100 - Risers
Autodesk Inc. (ADSK) $88.40 2.90%
Liberty Global plc Series A (LBTYA) $36.78 2.77%
Vodafone Group Plc ADS (VOD) $25.88 2.70%
T-Mobile Us, Inc. (TMUS) $62.99 2.67%
Liberty Global Plc Lilac Class C (LILAK) $23.15 2.52%
Liberty Global plc Series C (LBTYK) $36.24 2.52%
Liberty Interactive Corporation QVC Group (QVCA) $19.84 2.27%
PACCAR Inc. (PCAR) $68.87 2.26%
American Airlines Group (AAL) $42.09 2.14%
Micron Technology Inc. (MU) $26.12 2.11%
Nasdaq 100 - Fallers
O'Reilly Automotive Inc. (ORLY) $270.71 -1.70%
Sirius XM Holdings Inc (SIRI) $5.30 -1.67%
Ctrip.Com International Ltd. Ads (CTRP) $48.66 -1.44%
Express Scripts Holding Co (ESRX) $66.06 -1.17%
NetEase Inc. Ads (NTES) $286.86 -0.89%
Tesla Inc (TSLA) $255.73 -0.88%
Baidu Inc. (BIDU) $172.04 -0.46%
Intel Corp. (INTC) $35.10 -0.23%
Dentsply International Inc. (XRAY) $63.52 -0.22%
Analog Devices Inc. (ADI) $83.51 -0.20%