Dow streak of records ends as Fed hikes interest rates

Traders work on the floor of the New York Stock Exchange (NYSE) as Federal Reserve Chair Janet Yellen speaks to the media following the central bank’s latest policy meeting on December 14, 2016 in New York City. The Fed raised interest rates for the first time this year with a decision to move the rate to a range between 0.5 percent and 0.75 percent. AFP

NEW YORK, United States — Wall Street stocks fell Wednesday after the US Federal Reserve raised interest rates, snapping a seven-day streak of record closes for the Dow.

The Dow Jones Industrial Average dropped 0.6 percent to 19,792.53, retreating from the 20,000 mark which was within reach.

The broad-based S&P 500 fell 0.8 percent to 2,253.28, while the tech-rich Nasdaq Composite Index shed 0.5 percent to 5,436.67.

READ: Fed raises key interest rate, sees three hikes in 2017

The policy-setting Federal Open Market Committee voted unanimously to increase the key federal funds rate to a range of 0.5 to 0.75 percent, but repeated that the world’s biggest economy likely will require only “gradual” rate increases going forward.

The move was expected, but was coupled with a projection that central bankers now expect three interest rate increases in 2017 instead of the previously forecast two.

Stocks usually fall when interest rates are raised, but some analysts had thought bullish sentiment after the presidential election might propel the blue-chip index to 20,000.

Instead, stocks retreated as Fed Chair Janet Yellen offered a cautiously optimistic outlook on the economy similar in tone to her appearances prior to the election.

“This is not a Fed that wants to get ahead of things,” said Gregori Volokhine, president Meeschaert Capital Markets.

Technology shares were mixed as Trump met with a group of industry leaders for the first time since the election. Amazon lost 0.7 percent, while Tesla Motors added 0.3 percent. Google parent Alphabet, Apple and Facebook were little changed.

Wells Fargo slumped 2.0 percent after the Federal Reserve rejected its so-called “living will” strategy, a plan for dismantling banks if they go bankrupt. The Fed barred Wells Fargo from opening new international branches until it fixes the deficiencies.

General Motors dropped 3.8 percent on reports that its China joint venture with SAIC Motor Corp is being investigated for possible antitrust violations. A Bloomberg article citing unnamed people familiar with the matter said some dealerships were being probed over retail pricing practices.

Generic drug companies Mylan and Teva Pharmaceutical Industries lost 1.6 percent and 1.8 percent, after US prosecutors announced the first criminal charges in a wide-ranging antitrust probe of the industry against two executives from a smaller pharma company. CBB