Stock market today: Dow ends lower as Fed signals more hikes ahead

By Yasin Ebrahim

Investing.com -- The Dow closed lower Wednesday after the Federal Reserve delivered a widely expected pause, but forecast further hikes to come as inflation remains sticky.

The Dow Jones Industrial Average fell 0.7%, or 232 points, the Nasdaq rose 0.4% and the S&P 500 rose 0.1%.

The Fed now sees its terminal rate, or peak rate, at 5.6% at the midpoint in 2023, up from a prior forecast of 5.1% seen in March, suggesting two more hikes remain in play.

“For now, though, this is a more hawkish pause than we expected, and it strikes us as, well, pointless," Pantheon Macroeconomics said in a Wednesday note, suggesting that the Fed isn’t likely to have a clearer view on the economy by the July meeting as incoming data will be sparse.

”Only one round of inflation and labor market data will be released between now and the July meeting, and the unreliability of the monthly numbers means that policy decisions, in our view, should not be determined by such short runs,” it added.

Treasury yields, meanwhile, closed at the highs of the day to reflect the hawkish Fed outlook, forcing tech to give up gains, though dips appeared to find buyers as the sector was among the biggest gainers.

Semiconductor stocks underpinned tech as NVIDIA Corporation (NASDAQ:NVDA), Broadcom Inc (NASDAQ:AVGO), and Advanced Micro Devices (NASDAQ:AMD) closed in the green with the latter supported by reports that Amazon (NASDAQ:AMZN) is mulling using the AMD’s AI chips in its cloud business.

Health care, meanwhile, was the biggest drag on the market, paced by a slide in UnitedHealth (NYSE:UNH)Health and Humana (NYSE:HUM) amid concerns a rebound in elective surgeries following the Covid lull will boost rising costs.

United Health CEO Andrew Witty said Wednesday seniors were catching up on surgeries that they deferred during the pandemic and warned that second-quarter premium revenue spent on care may be at the upper end or moderately above expectations.

Energy dropped more than 1% after oil prices came under pressure on worries that further Fed hikes would hurt economic growth and oil demand.

Devon Energy Corporation (NYSE:DVN), Diamondback Energy Inc (NASDAQ:FANG) and Marathon Oil Corporation (NYSE:MRO) were among the biggest decliners.