The Dow Jones Industrial Average fell 0.8% and ended near session lows on Wednesday after the Fed raised rates by 25 basis points and brought the effective rate to 5%-5.25% while indicating a pause in rate hikes.
The S&P 500 fell 0.7% while the Nasdaq gave up all of its early gains and fell 0.5%. The small-cap Russell 2000 bucked the trend and showed a 0.4% gain, however. The Innovator IBD 50 gained 0.4% despite a dent from Advanced Micro Devices.
Volume on the NYSE was lower and on the Nasdaq higher compared to the same time on Tuesday.
Crude oil dived nearly 4% to $68.90 a barrel. The yield on the benchmark 10-year Treasury note fell nearly 4 basis points to 3.40%.
On Wednesday, the Fed stated that "in determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
In the news conference, Fed Chair Jerome Powell indicated the need for "ongoing assessment" meeting by meeting as events unfold. Inflation is still well above the target 2% while the labor market continues to run hot.
Wednesday's ADP report showed that a 296,000 rise in payrolls in April, well above expectations of 143,000. The ISM Services index rose to 51.9, showing that part of the economy was in expansion mode. Both numbers strengthen the case for rate hikes after today.
Yet, continuing weakness in regional banks and fears about the debt ceiling present risks for the economy. On Tuesday, Treasury Secretary Janet Yellen said that the economy could hit the debt ceiling as early as June 1.
The CME FedWatch Tool shows just a 15.5% chance of a further 25 basis point hike in June.
According to Chief Economist at LPL Financial Jeffrey Roach, investors have likely seen the peak fed funds rate. As "inflation further decelerates and the job market cools, investors should anticipate some rate cuts in the latter half of the year."
Friday's jobs report could be the next indication of future rate policy.
Futures Rise On PacWest Update After PACW Dives On Sales Report
Stocks Moving Today
Shares of AMD fell below the 50-day line after earnings late Tuesday. The chipmaker beat estimates but lowered its second quarter revenue outlook. Still, AMD expects better growth in the second half as PC and server markets strengthen. The stock is more than 8% below its 89.04 buy point, causing a sell signal.
Dow Jones tech leader and AMD rival Intel rose nearly 3% on Wednesday after a test of the 200-day moving average.
Uber broke out of a cup base with an entry at 37.68, according to IBD MarketSmith chart analysis. The IBD Leaderboard options play and IBD 50 stock rose for the sixth day in row, a streak that included this week's earnings report.
Eli Lilly surged, hitting an all-time high, after the drugmaker said its Alzheimer trial treatment decreased cognitive decline in certain conditions.
Core & Main broke out of a cup base with a buy point of 26.73. Volume was 47% higher than average, and the relative strength line is at new highs.
Logistic company XPO, which reports earnings Thursday, attempted a breakout at 45.16 but closed below the entry. Inspire Medical Systems broke out briefly from a cup with handle but closed below the 277.28 buy point. The company reported Q1 results Tuesday.
Among oil plays, Shell and ConocoPhillips fell with earnings due on Thursday.
Lithium play Livent surged above its 50-day line after it announced earnings late Tuesday. Shares of Albemarle fell ahead of earnings later today. The stock continues to be well below its 50-day line.
Sunrun and Etsy rose in after hours trading after reporting earnings, while Qualcomm fell on a weak outlook.
Dow Jones Stock In Focus
Apple rose with earnings due Thursday. Shares are extended and face possible resistance around 176.
Please follow VRamakrishnan on Twitter for more news on the stock market today.
