Desmoines News Desk

Stocks close lower amid weak GDP, Fed statement

Stocks close lower amid weak GDP, Fed statement

Stocks closed lower Wednesday as investors digested weaker-than-expected economic growth and the latest statement from the Federal Reserve that indicated policymakers were still grappling with when to begin raising interest rates. At the conclusion of its two-day policy meeting, the Fed lowered its economic outlook and said growth “slowed during the winter months, in part reflecting transitory factors.” But the Fed expects the economy to rebound and grow at a moderate pace in coming months.stock_market_01

Policymakers gave no clear signal of when it plans to raise its benchmark interest rate for the first time since 2006 but they have indicated they expect to act this year. The Fed edited out all calendar references in its policy statement related to its rate-hike timetable, but Wall Street pros say the odds of a June hike have diminished further.

Earlier Wednesday, the Commerce Department reported that gross domestic product — the value of goods and services produced in the U.S. — expanded at a seasonally adjusted annual rate of 0.2% in first quarter. That’s down from 2.2% in the fourth quarter. The Dow Jones industrial average fell 74.61 points, or 0.4%, to 18,035.53 and the Standard & Poor’s 500 index dropped 7.91 points, or 0.4%, to 2106.85. The Nasdaq composite closed down 31.78 points, or 0.6%, to 5023.64. Yields on 10-year government bonds sprang above 2%, rising to 2.05% from 2% late Tuesday.

European benchmarks got hammered on a combination of the GDP news, anticipation of the timing of Fed rate hikes and the strengthening euro. Germany’s DAX suffered a 3.2% pounding. The CAC 40 of France ended down 2.6%, while the FTSE of Britain slid 1.2%. In Asia, Japan’s Nikkei 225 index ended up 0.4% and Hong Kong’s Hang Seng index dropped 0.2%. The Shanghai Composite was flat.

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