Instant View: Stocks sink after Fed raises rates, Powell comments on balance sheet

NEW YORK (Reuters) - U.S. stock markets tumbled on Wednesday, reversing a morning rally after the U.S. Federal Reserve delivered an expected interest rate hike but signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.

Losses accelerated on comments by Fed chairman Jerome Powell at a press conference that he does not see the Fed changing its policy of keeping its balance sheet run down on autopilot.

Market Reaction:

STOCKS: Wall Street seesawed after the announcement from the Federal Open Market Committee, taking the latest nosedive after Chairman Jerome Powell started speaking at the post meeting press conference. The S&P 500 .SPX was last down 1.51 percent after being up more than 1 percent right before the FOMC meeting ended. The Dow .DJI was off 1.4 percent. BONDS: The 10-year U.S. Treasury note US10YT=RR yield fell to 2.7673 percent and the 2-year yield US2YT=RR fell to 2.6417 percent. FOREX: The dollar index .DXY was last off 0.1 percent.

Comments:

JUAN PEREZ, SENIOR CURRENCY TRADER, TEMPUS, INC, WASHINGTON

“The U.S. Dollar will likely show resilience to losing some of its value since the hike does represent a higher return for investors. However, the initial take is that Powell and the committee may have had second thoughts about the originally thought pace of hikes for next year.”

“The economy seems to have a bad aura around it. Everybody seems to be somewhat in agreement, and the sentiment has manifested itself in the form of doubts about increasing borrowing costs too quickly.”

“We predict the dollar will swing as it closes the year, but will be on a downward trend if indeed the Fed admits more caution and monitoring of lagging indicators is needed before further tightening.”

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