US stocks dip after Fed rate decision

Disappointed investors bid stocks lower today after the Federal Reserve, raising interest rates for the 14th time in nearly two years, failed to give Wall Street a clear signal on when those rate hikes would end.

In its statement accompanying the quarter-point increase in rates, the central bank said “some further policy firming may be needed” to keep inflation under control – leaving the door open for another hike at the next meeting in March and beyond.

The major indexes were already down ahead of the Fed’s decision – the last one under outgoing Chairman Alan Greenspan – and the hint of at least one more rate hike left investors uncertain, although most analysts felt the programme of continued, measured rate hikes was at an end.

“The knee-jerk reaction was things aren’t as sure as everybody thought, but when I look at this, this is right in the middle of what my expectations were,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati.

“They left a rate hike in the deck here in case they need it, but that doesn’t mean more of the same.”

Separately, the Dow Jones industrials were under pressure after component Altria Group Inc. missed Wall Street’s profit expectations for the fourth quarter, though that news was offset by strong profits at drugmaker Merck & Co.

The Dow fell 35.06, or 0.32%, to 10,864.86.

Broader stock indicators were modestly lower. The Standard & Poor’s 500 index fell 5.11, or 0.4%, to 1,280.09, and the Nasdaq composite index slipped 0.96, or 0.04%, to 2,305.82.