S&P 500 closes lower as Fed anticipates monetary tightening By Reuters

©Reuters. FILE PHOTO-Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, United States. January 25, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK, Jan 26 (Reuters) – The index ended lower on Wednesday, after a sharp drop that reversed earlier gains after the US Federal Reserve issued its statement at the end of its two-day monetary policy meeting.

* He also fell, but recovered late in the session to close slightly higher.

* While all three indices enjoyed a brief rise after the Federal Open Market Committee left key interest rates near zero, the gains quickly evaporated as the Fed statement warned it would soon start raising interest rates. Federal Funds to combat persistent inflation.

* “With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the statement said.

* Stocks fell as Fed Chairman Jerome Powell’s subsequent news conference began, during which he warned that inflation remains above his long-term target and that supply problems were bigger and longer-lasting than what was thought.

* “When Powell was asked by reporters if the Fed would consider raising rates at every meeting, which would mean more than four times this year, he didn’t say they wouldn’t, indicating flexibility to raise rates much more quickly than expected.” expected,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance.

* Based on preliminary data, the S&P 500 lost 6.65 points, or 0.15%, to 4,349.80, while the Nasdaq gained 0.2%. The Dow Jones Industrial Average fell 121.83 points, or 0.36%, to 34,175.90.

(Reporting by Susan Mathew, Devik Jain and Bansari Mayur Kamdar in Bengaluru; Spanish editing by Carlos Serrano)

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