By Yasin Ebrahim
Investing.com – The Dow closed lower on Wednesday but swung wildly between gains and losses as the Federal Reserve moved toward a slower pace of rate hikes but also signaled higher-than-expected rate hikes.
It was down 0.42% or 142 points, slipped 0.76% and was down 0.61%.
On Wednesday, the Federal Reserve raised by 0.5% its forecast that interest rates will peak at 5.1% and remain there through 2023.
That was higher than the 4.6% forecast in September and poured some cold water on Wall Street’s expectations for a rate cut in the second half of next year.
The Fed also continued to forecast a soft landing for the economy, although not many shared their optimism.
“Once again, it’s hard to believe that the Fed is capable of taking the economy down such a gentle slide to slightly lower growth, only slightly higher unemployment and on-target inflation,” Jefferies said in a note. .
Treasury yields took a small step on the news as the US, sensitive to Fed rate hikes, retreated from its session highs.
Financial sectors, mainly banks, were the hardest hit as the Fed’s dovish stance renewed fears that the central bank would tighten monetary policy too much and push the economy into recession.
PNC Financial Services Group Inc (NYSE: ), Synchrony Financial (NYSE: ) and Signature bank (NASDAQ: ) fell about 3%
Technology stocks fell 1% as major technology trading was mixed, with Apple (NASDAQ: ) and Alphabet (NASDAQ: ) ending the day lower, while Microsoft Corporation (NASDAQ: ) and Meta Platforms Inc (NASDAQ: ) were in green.
Healthcare was the only sector to end the day in the green, leading another gain Modern (NASDAQ:) as investors continued to cheer the drugmaker’s positive news on its skin cancer drug a day earlier.
In other news, Delta Air Lines ( NYSE: ) cut most of its earnings despite forecasting revenue growth next year based on strong travel demand expected to continue through 2023.