The Dow Jones Industrial Average sold off on Wednesday, following the Federal Reserve's consequential decision to aggressively raise rates to counteract inflation. Major indexes plummeted in the final minutes.
Dow Jones, Nasdaq Whipsawed After Fed Decision
The Dow closed 1.7% lower following a late afternoon sell-off, while the S&P 500 shed 1.7 as well%. The tech-heavy Nasdaq fared the worst, losing 1.8%, while the Russell 2000 fell 1.5%.
Volume was higher by double-digit percentages on both the Nasdaq and the NYSE, compared to the same time on Tuesday.
The Fed announced its third consecutive 75-basis-point hike as it aggressively tries to tame widespread inflation. The increase was widely expected, according to the CME Group's FedWatch tool.
The 75-basis-point hike brings the Fed Funds to a target range of 3%-3.25%, up from the previous 2.25%-2.5%.
The quarterly "dot plot" sees the key lending rate rising to 4.4% by the end of 2022. Additionally, the Fed reduced its outlook for economic growth.
The bank now forecasts just a 0.2% annualized GDP increase, down from 1.7% in June. It also projects that personal consumption expenditures, the preferred measure of inflation, will increase 5.4% in 2022, up from the prior forecast of a 5.2% increase.
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 30183.71 | -522.52 | -1.70 |
| S&P 500 | (0S&P5) | 3789.82 | -66.11 | -1.71 |
| Nasdaq | (0NDQC ) | 11220.19 | -204.86 | -1.79 |
| Russell 2000 | 175.33 | -2.73 | -1.53 | |
| IBD 50 | 26.23 | -0.49 | -1.83 | |
Last Update: 4:10 PM ET 9/21/2022 |
||||
Stocks rose modestly ahead of the announcement but gains were wiped out immediately following the decision.
The major indexes then reversed gears once again, trading higher. But in the final minutes of trading, the indexes ultimately fell. They remain below key levels of support at their 50-day moving averages, after reversing at resistance in recent weeks.
Outside The Dow Jones: S&P Sectors On The Move
West Texas intermediate crude oil futures also reversed lower, falling 0.7% to $83.38 per barrel. The yield on the 10-year Treasury note held close an 11-year high under 3.6%. The benchmark spiked earlier this week, ahead of today's market-moving news.
Looking at the 11 S&P 500 sectors, commercial services and consumer discretionary stocks led the downside while consumer staples was the only sector to trade higher. As for IBD's industry groups, many leisure-related groups led the downside, including travel booking, lodging and movies. Airlines also underperformed.
On the upside, solar energy stocks continue to lead, collectively rising 2% Wednesday afternoon. The group remains IBD's top-ranked industry group.
Stocks To Watch: Solar Stock Leads IBD 50
Enphase, a leading IBD 50 stock and solar energy play, was among top gainers on Wednesday. The stock rose as high as nearly 2% as shares continued to hold above support at their 21-day exponential moving average. But the stock pared gains to break-even amid the late-day sell-off.
ENPH stock has been drifting sideways-to-slightly higher in recent weeks, which marks unusual strength in this market correction. The stock's relative strength line also looks strong.
Shares of Toro, landscaping equipment tools manufacturer, also pared early promising gains to a 0.5% loss, as the stock trades near a 92.05 entry from a flat base. The stock is trading less than 1% below the buy point while its relative strength line is hitting a new high, which is bullish.
On the downside among IBD 50 stocks, two oil and gas plays underperformed. Cenovus Energy and Talos Energy lost 3.9% and 4%, respectively. Talos slipped below support at its 21-day line while Cenovus is testing for support at its 50-day moving average.
The Innovator IBD 50 ETF, which reversed at 50-day moving average resistance last week, closed 1.8% lower.
