Dow edges to record, dollar dips as Fed lifts rates

John Biers, Agence France-Presse

Posted at Jun 15 2017 08:01 AM

Flags fly over the Federal Reserve Headquarters on a windy day in Washington, U.S., May 26, 2017. Kevin Lamarque, Reuters

NEW YORK - Wall Street stocks and the dollar offered a muted reaction Wednesday to the Federal Reserve's decision to hike interest rates and signal one more increase in 2017.

The Dow edged to a fresh record, while both the S&P 500 and Nasdaq finished lower. The dollar's losses against the euro moderated after the Fed's announcement, which was more hawkish than some analysts expected.

Overseas stock markets were mixed, with Frankfurt rising, but Tokyo, London and Paris all declining.

The Fed, as expected, raised benchmark interest rates, citing a better labor market and moderately improving economic activity. The US central bank also continues to project a third rate increase this year, essentially brushing aside weaker inflation and consumption data in recent weeks.

"The third rate hike in seven months, coming not long after a relatively poor Q1 GDP print, suggests the Fed has become less data dependent in its monetary policy decisions," Fitch Ratings Chief Economist Brian Coulton said.

Joe Manimbo, senior market analyst at Western Union Business Solutions said while the Fed's "glass half-full assessment of the US economy" should support the dollar, he cautioned that "if the Fed's view should prove overly optimistic the dollar would be at risk of deepening its recent losses."

The opposite movements of the Dow and Nasdaq suggested the market was resuming a rotation of investment away from high-flying tech stocks, a trend that first surfaced late last week. Shares of Apple, Google parent Alphabet and Microsoft all fell.

"On balance you got the continuation of technology stocks selling and the market accepting the Fed decision as consensus," said Art Hogan, chief market strategist at Wunderlich Securities.

US oil prices plunged over three percent after the release of inventory data -- a key signal regarding energy demand in the world's biggest economy -- showed a smaller-than-expected drop in crude stocks, and a rise in gasoline.

Earlier on Wednesday the International Energy Agency said global oil output would expand faster than worldwide demand next year, primarily as US producers ramp up crude production, and that could hamper exporters' efforts to prop up prices.

The IEA's assessment came a day after OPEC complained that increased output in the US was slowing efforts to rebalance supply and demand in the oil market.

KEY FIGURES AT 2100 GMT (5 a.m. in Manila)

New York - Dow: UP 0.2 percent at 21,374.56 (close)

New York - S&P 500: DOWN 0.1 percent at 2,437.92 (close)

New York - Nasdaq: DOWN 0.4 percent at 6,194.89 (close)

London - FTSE 100: DOWN 0.4 percent at 7,474.40 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,243.29 (close)

Frankfurt - DAX 30: UP 0.3 percent at 12,805.95 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,553.45

Tokyo - Nikkei 225: DOWN 0.1 percent at 19,883.52 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 25,875.90 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,130.67 (close)

Euro/dollar: UP at $1.1220 from $1.1206 at 2030 GMT

Pound/dollar: UP at $1.2758 from $1.2752

Dollar/yen: DOWN at 109.54 yen from 110.06 yen

Oil - West Texas Intermediate: DOWN $1.73 at $44.73 per barrel

Oil - Brent North Sea: DOWN $1.72 at $47.00 per barrel

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