US open: Stocks sharply lower following Fed rate decision

dl wall street wall st new york city new york stock exchange nyse dow jones nasdaq street sign nyc united states usa america pb — Sharecast / Alessandro D Andrea via Pixabay

Wall Street stocks were sharply lower early on Thursday as market participants continued to process the Federal Reserve's latest policy update.

As of 1545 GMT, the Dow Jones Industrial Average was down 1.77% at 33,365.79, while the S&P 500 lost 1.90% to 3,919.22 and the Nasdaq Composite came out the gate 2.28% weaker at 10,916.24.

The Dow opened 600.56 points lower on Thursday, extending losses recorded in the previous session after the Federal Reserve Bank raised its base interest rate by 50 basis points and chairman Jerome Powell struck a hawkish tone. The central bank stated it will continue to hike rates through 2023 and also projected a higher-than-expected terminal rate of 5.1%, even though the current targeted range for rates of 4.25% to 4.5% is already the highest its been in 15 years.

Thursday's primary focus was news that Americans had unexpectedly reined in their spending in November. According to the Department of Commerce retail sales volumes fell at a month-on-month pace of 0.6% in seasonally adjusted terms to reach $689.4bn. Economists had pencilled-in a flat reading following the 1.3% jump observed in October. Sharp declines were seen in multiple categories, including in sales of motor vehicles, of furniture and building materials, department stores and at non-store retailers.

On another note, US first-time unemployment claims fell by 20,000 in the week ended 10 December, dropping to 211,000 - the lowest level since the end of September and well below market expectations of 230,000. According to the Labor Department, jobless claims fell by 39,095 to 248,881 on a seasonally unadjusted basis, while the four-week moving average, which aims to strip out week-to-week volatility, fell by 3,000 to 227,250. Continuing claims, on the other hand, edged up by 1,000 to 1.67m in the week ended 3 December.

Elsewhere, factory activity in the US mid-Atlantic region continued to shrink at the end of 2022, albeit at a slower clip, the results of a closely followed survey revealed. The Federal Reserve Bank of Philadelphia's manufacturing sector index rebounded from a reading of -19.4 for October to -13.8 in November. Economists had forecast a reading of -10.0.

Still on data, industrial production growth in the US fell short of forecasts last month due to the drag from factory and mining activity. According to the Department of Commerce, in seasonally adjusted terms, total industrial production slipped at a month-on-month pace of 0.2% in November. That compared to economists' forecasts for a rise of 0.2%.

Finally, business inventories rose 0.3% in October, according to the Census Bureau, following a downwardly revised increase of 0.02% in September but slightly shy of estimates for a reading of 0.04%.

In the corporate space, Elon Musk offloaded 22.0m shares in electric carmaker Tesla, bringing the total value of stock sold by the group's chief executive over the past year to almost $40.0bn.

Adobe will report earnings after the close.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Verizon Communications Inc. (VZ) $37.85 1.07%
Honeywell International Inc. (HON) $0.00 0.00%
Dowdupont Inc. (DWDP) $0.00 0.00%
McDonald's Corp. (MCD) $271.83 -0.98%
Travelers Company Inc. (TRV) $184.43 -1.18%
Johnson & Johnson (JNJ) $177.54 -1.23%
Chevron Corp. (CVX) $170.13 -1.28%
Salesforce.Com Inc. (CRM) $132.91 -1.37%
Coca-Cola Co. (KO) $63.06 -1.45%
Walmart Inc. (WMT) $144.44 -1.52%