© Reuters. WALL STREET ENDS LOWER
by Caroline Valetkevitch
NEW YORK (Reuters) – Wall Street ended lower with moderate a session met on Wednesday, after the federal Reserve was as expected raised its intervention rate by a quarter point, and had planned two more interest rate increases this year and no longer a.
The Fed also abandoned its commitment to maintain rates at a level low enough to stimulate the economy “for some time” while expressing its intention to tolerate inflation higher than its target at least until 2020.
“It speaks of the four rate increases this year and not three, it is disappointing. We knew all that it will float the rate in June but we thought it could mark a break in September; apparently this will not be the case,” remarked Stephen Massocca (Wedbush Securities).
“It seems that the Fed is a little more confident for what is to reach the inflation target, or even exceed it a little bit,” said Katie Nixon (Northern Trust Wealth Management), holding that the four rate hikes planned for this year are a little surprising.
The Fed expects inflation to reach 2.1% this year and remain at that level until 2020.
The Dow Jones has ceded 119,53 points, or 0.47 per cent, to 25.201,20 points. The S&P-500, wider, lost 11,22 points (0.40 per cent) to 2.775,63 points. The Nasdaq Composite has dropped 8,10 points (0,11%) 7.695,7 points.
The clearances were generalized, and the indexes have finished not far from their lows of the session, which explains that most of the indices S&P sector ended in the red, including financial (-0,3%), although these values tend to benefit from a tightening of interest rates.
The traders have also learned on Wednesday that producer prices in the United States rose more strongly than expected in may, posting their largest annual increase in nearly six and a half years, but the pressures of the bottom remained moderate.
The statistics had little effect on the Stock market and the Treasuries but it has contributed, however, to flatten a bit more the yield curve.
On the side of values, the media sector has been very follow-up, after AT&T had obtained Tuesday, authorisation and unconditional american justice to buy Time Warner.
AT&T has lost more than 6% and Time Warner has gained 1.8%.
In the same sector, Twenty First Century Fox has taken a 7.7%, the green light for a takeover of Time Warner by AT&T that triggered speculation about an offer pending Comcast (NASDAQ:CMCSA) (-0,19%) for most of the assets that Fox had already agreed to sell to Walt Disney (+1.9 per cent).
The result was not made to wait. Comcast immediately announced after the close that it offered to buy back at $ 65 billion (55 billion euros) the assets that Twenty-First Century Fox (NASDAQ:FOX) had agreed to sell to Walt Disney in December.
The shares of Comcast, Fox and Disney have varied little in post-Award.
The announcements of the central bank have had little effect on the dollar, which finished on a note on the stable, except against the euro, vis-à-vis which it has ceded to 0.44%.
The gains registered by the greenback immediately after the Fed had said that she planned not one, but two more rate increases this year were offset by profit-taking on the eve of another meeting monetary very followed, that of the european central Bank, during which could be referred to the calendar of the unwinding of its quantitative easing program (QE).
“We are in a market that is very unstable and Europe must ultimately be more of a concern,” said Juan Perez, currency trader Tempus Consulting.
“The probability of two increases in addition to will without a doubt increase and cause the dollar to his suite,” noted Daragh Maher, head of policy changes, HSBC (LON:HSBA) of the Securities USA.
Logically, the monetary tightening of the Fed, as well as his comments on inflation, have caused a vivehausse yield american bond.
The two-year-old has reached 2,602%, the highest since August 2008, before returning to 2,586%, compared to 2,541% on Tuesday.
The 10-year reached a peak of three weeks of 3.01% before dropping back to 2,988%, while the 30-year-old has registered a highest of a week of 3,122% and then returned to 3,110%.
The spread between the five and the 30-year-old is narrowed to 24.4 basis points, the lowest since January 2012.
(With Richard Leong and Gertrude Chavez-Dreyfuss)