Investing.com – The Dow ended down as it struggled to retain its gains following the Fed's decision to keep rates unchanged and to reverse future increases due to trade concerns and the fall of financial values.
The fall of 0.55%, the loss of 0.29%, while the increase of 0.07%. The Dow jumped 137 points in six minutes after the Fed's announcement, but trimmed its gains soon after.
The Federal Reserve unexpectedly cut its rate hike outlook, signaling that no further tightening would be appropriate for the current year in a context of slowing economic growth.
"In the light of global economic and financial developments and reduced inflationary pressures, the Committee will be patient as it will determine future adjustments to the federal funds target range that may be appropriate to support these results." said the Fed in a statement.
As interest rate hikes seem to be nearing their end, the Fed also announced that it will begin in May to reduce the amount of proceeds – received from securities on its balance sheet – allowing it to disappear every month and stop the program in September.
The Fed left up to $ 50 billion worth of maturing securities per month, which peaked at about $ 4,500 billion in January 2015, but is now down to about $ 4 trillion.
"The FOMC has more than reinforced market expectations of a prolonged, if not impossible, pause in the tightening cycle," said BMO in a note.
The Fed's accommodative monetary policy drove down government bond yields, putting pressure on financial services, mainly banks. Falling government bond yields stifle banks' ability to generate net interest.
Goldman Sachs (NYSE :), JPMorgan Chase (NYSE 🙂 and Bank of America (NYSE 🙂 ended the day with heavy losses.
Rate-sensitive yield fell by almost 3%.
The Fed's monetary policy decision was made in the wake of President Donald Trump's bleak update on trade.
"We are not talking about deleting (tariffs), we are talking about leaving them for a long time, because we have to make sure that if we reach an agreement with China, China will respect the agreement," Trump said. to the press. .
The United States has imposed tariffs on Chinese goods worth $ 250 billion, about half of the value of US imports from the country. China retaliated with US $ 110 billion worth of US exports.
In the tech sector, FANG shares rebounded, especially Netflix (NASDAQ :).
In terms of corporate profits, FedEx (NYSE 🙂 was down 3.5% after the delivery company announced lukewarm forecasts.
Micron Technology (NASDAQ 🙂 recorded a modest decline in quarterly results after posting mixed results, posting optimistic performance but a failure in profitability. In the run-up to the chip maker's quarterly results, some feared that falling demand in memory would weigh heavily on performance.
Micron has been up about 27% since the beginning of the year and has played an important role in helping all semiconductors achieve gains of more than 20% since the beginning of the year.
Main winners and losers of the S & P 500 today:
Netflix (NASDAQ :), Pioneer natural resources (NYSE :), Twitter (NYSE 🙂 were among the top winners of the S & P 500 for the session.
Viacom B (NASDAQ :), KeyCorp (NYSE :), Brighthouse Financial (NASDAQ 🙂 were among the worst of the session on the S & P 500