Washington, Mar. 23, (dpa-AFX/GNA) - Stocks showed a lack of direction throughout much of the session on Friday before coming under pressure in the final hour of trading. The major averages all moved sharply lower, with the tech-heavy Nasdaq pulling back after reaching its best intraday level in over a month.
The major averages finished the session at their worst levels of the day. The Dow plunged 530.49 points or 1.6% to 32,030.11, the Nasdaq tumbled 190.15 points or 1.6% to 11,669.96 and the S&P 500 dove 65.90 points or 1.7% to 3,936.97.
The late-day sell-off on Wall Street came after the Federal Reserve announced its decision to continue raising interest rates despite recent turmoil in the banking industry.
The Fed said it has decided to raise the target range for the federal funds rate by another 25 basis points to 4.75 to 5.0%.
While the interest rate hike was widely expected, some traders may have been holding out hope the Fed would leave rates unchanged.
The Fed also said additional policy firming may be appropriate, although that marks a shift from saying ongoing increases in rates will be appropriate.
The central bank’s latest projections suggest the Fed plans to raise rates just one more time this year to a range of 5.0 to 5.25%.
In its statement, the Fed described the U.S. banking system as “sound and resilient” despite the recent failures of Silicon Valley Bank and Signature Bank.
The Fed acknowledged recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation but noted the extent of these effects is uncertain.
Banking stocks fell sharply following the rate hike by the Fed, resulting in a 4.7% nosedive by the KBW Bank Index.
Substantial weakness also emerged among rate-sensitive commercial real estate stocks, with the Dow Jones U.S. Real Estate Index plunging by 3.6%.
Oil service stocks also moved sharply lower despite an increase by the price of crude oil, dragging the Philadelphia Oil Service Index down by 3.0%.
Airline, networking and natural gas stocks also saw considerable weakness, while gold stocks bucked the downtrend amid an uptick by the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index surged by 1.9%, while Hong Kong’s Hang Seng Index jumped by 1.7%.
The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index climbed by 0.4%, the French CAC 40 Index rose by 0.3% and the German DAX Index inched up by 0.1%.
In the bond market, treasuries have bounced back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 3.598%.
Trading on Thursday may continue to be impacted by reaction to the Fed decision, while reports on weekly jobless claims and new home sales may also attract attention.
GNA