Eric Lynch, managing director of Scharf Investments, joined Cheddar News to discuss market trends and what lies ahead as the Federal Reserve paused interest rate hikes.
NEW YORK — Wall Street swung to a mixed finish after the Federal Reserve hinted it may raise interest rates two more times this year, even as it held them steady Wednesday.
The S&P 500 finished the day 0.1% higher after pinballing between gains and losses following the Fed's announcement. The Dow Jones Industrial Average dropped 232 points, or 0.7%, while the Nasdaq composite rose 0.4%.
The Fed closed its latest policy meeting by saying it would keep rates where they are to give more time to see how its hikes over the last 15 months are affecting the economy. It's attempting to slow the economy just enough to snuff out high inflation, but not so much as to create a recession.
It was the first time in more than a year that the Fed has not hiked rates at a meeting. Still, Fed policy makers indicated Wednesday they expect its main interest rate to climb at least 0.50 percentage points by the end of the year. The federal funds rate is already at its highest level since 2007, in a range between 5% and 5.25%.
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Many traders on Wall Street came into Wednesday bracing for just one more hike this year, if any. The threat of a more aggressive Fed than expected initially sent prices tumbling for all kinds of investments.
Traders work on the floor Wednesday at the New York Stock Exchange.
In the bond market, the 10-year yield climbed as high as 3.83% from 3.77% just before the Fed's announcement. It later receded to 3.79%, compared with 3.82% late Tuesday. That yield helps set rates for mortgages and other important loans.
The two-year Treasury yield, which moves more on expectations for the Fed, climbed to 4.68% from 4.67% late Tuesday and was as high as 4.78%.
Stock indexes initially sank amid worries about higher rates but they pared their losses, and bond yields gave back gains as Fed Chair Jerome Powell spoke at a news conference, saying no decisions on upcoming rate hikes were made yet.
Some of the sharpest drops in the stock market came from several health insurers after UnitedHealth Group flagged how many customers were getting knee procedures and other outpatient services done. That could raise costs for insurers, and UnitedHealth fell 6.4%. Humana dropped 11.2%.
Stocks of companies that make products used in hip replacements and other health procedures were at the front of the market. Stryker rose 4.2% and Boston Scientific gained 4.2%.
All told, the S&P 500 rose 3.58 points to 4,372.59. The Dow dropped 232.70 to 33,979.33, and the Nasdaq gained 53.16 to 13,626.48.
Indexes rose modestly in Europe and ended mixed across Asia. Japan's Nikkei 225 rose 1.5%, continuing a strong run where it's already jumped more than 28% this year.