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20-Dec2018

US markets end lower after Fed hikes rates

The US markets ended lower on Wednesday after the Fed announced its fourth interest-rate increase of the year, hiking the federal funds rate by 25 basis points to a range of 2.25% to 2.5%. While the Fed also forecast fewer than previously estimated rate hikes next year, the central bank's tone was not as dovish as some traders had hoped. The central bank said its Federal Open Market Committee decided to raise the target range for the federal funds rate by 25 basis points from 2.25 percent to 2.50 percent. Besides, cautiousness also prevailed in the markets as the central bank lowered its forecasts for real GDP growth in 2018 and 2019 to 3.0 percent and 2.3 percent, respectively. The Fed previously projected 3.1 percent growth in 2018 and 2.5 percent growth in 2019.

On the economic front, existing home sales in the US unexpectedly showed a significant increase in the month of November, according to a report released by the National Association of Realtors. NAR said existing home sales surged up by 1.9 percent to an annual rate of 5.32 million in November after jumping by 1.4 percent to a rate of 5.22 million in October. Street had expected existing home sales to drop by 0.6 percent. Despite the second consecutive monthly increase, existing home sales in November were down by 7.0 percent compared to the same month a year ago. The report said the median existing home price for all housing types in November was $257,700, up 1.0 percent from $255,100 in October and up 4.2 percent from $247,200 in November of 2017.

Dow Jones Industrial Average plunged 351.98 points or 1.49 percent to 23323.66, Nasdaq declined 147.08 points or 2.17 percent to 6636.83 and S&P 500 was down by 39.20 points or 1.54 percent to 2506.96.


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