The stock market disapproved of the Fed's move on interest rates and Chair Jerome Powell's comments as stocks sold off into the close. The market soured after Powell said rate cuts should not be expected.
The Federal Reserve raised the fed funds rate by the expected 25 basis points. The increase brings the rate to 4.75% to 5.0%, the highest level since September 2007. The hike is the ninth consecutive rate increase aimed at battling inflation over the past year.
The FOMC stated that the banking system is "sound and resilient" but warned that banking troubles "are likely to result in tighter credit conditions." Indexes slid after Powell, when asked if rate cuts should be expected, replied, "That's not our baseline expectation."
He added that sustained tighter bank lending conditions could have a major macroeconomic impact which would be considered into future policy decisions. At the same time, the Fed signaled it's tapering off of rate increases.
The Federal Reserve has a delicate dance to perform as it tries to tamp down inflation by raising rates, while being sensitive to the banking crisis. In its new forecast, the Fed indicated just one more rate hike.
The 10-year U.S. Treasury yield shed 14 basis points to 3.47%.
The Dow Jones Industrial Average and the Nasdaq composite fell 1.6%. The S&P 500 slid 1.7%. The Russell 2000 fared worse than the major indexes, down 2.8%.
NYSE volume fell and Nasdaq volume rose from Tuesday, according to preliminary numbers.
The S&P 500 neared the 50-day moving average before backing off. The Nasdaq held above its 50- and 200-day moving averages. The Nasdaq 100-tracking Invesco QQQ Trust ETF gave back 1.4%.
The Innovator IBD 50 ETF fared slightly better than the major indexes, falling 1.3%.
Crude oil added 1.8% to $70.90 per barrel. Bitcoin fell 4.3% to $27,080.
Stock Market Today: Doughnut Stock Rises
Ollie's Bargain Outlet gapped up 10% after it reported better-than-expected Q4 earnings per share and sales. Its full-year EPS and sales guidance also topped views. Shares of the membership warehouse retailer gapped above the 200-day moving average, finding support.
Aehr Test Systems retreated 1.1% after tapping the 37.67 buy point of a choppy base. Volume was only modestly above average, another damper on the breakout. However, the relative strength line hit a 52-week high on the weekly chart, a positive sign.
Nike dropped 4.9% despite a beat on top and bottom lines and an increase in the full-year sales forecast. But the company said it expects fiscal 2023 margins to drop by about 250 basis points. Nike is in a cup base with a 131.41 buy point, and back below its 50-day line after briefly piercing it Tuesday.
Winnebago gave back earlier gains, shedding 1.7% after reporting better-than-expected fiscal Q2 EPS and sales. But management said demand for recreational vehicles is falling. Shares dipped back to just above the 200-day moving average.
Krispy Kreme gapped up 6.3% in heavy volume after Truist Securities upgraded the doughnut shop stock to buy from hold, and raised its price target to 20 from 15. DNUT is extended from a 5% buy zone that went to 14.46 from a cup-with-handle base.
DoubleVerify gapped up 4% after KeyBanc upgraded the digital media platform stock to overweight from sector weight and raised its price target to 30.
Futures Rise After Fed-Led Sell-Off; Six Titans Mask Market Weakness
Stock Action: Meme Stocks Come Alive
GameStop soared 35.2% after surprising investors with stronger-than-expected Q4 results. The gaming and video electronics retailer touched the 200-day line before finding resistance at that level.
AMC Entertainment faded 1.6% from earlier gains, lagging fellow meme stock GameStop. Carvana was up more than 12%. The auto seller pre-announced guidance and plans to restructure debt.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
