Investing.com - The S&P 500 closed lower Wednesday after the Federal Reserve raised interest rates, but downplayed the prospect of steeper rate hikes, sending financials tumbling.
The Dow Jones Industrial Average fell about 0.40%. The S&P 500 fell 0.33%, while the Nasdaq Composite fell 0.21%.
A sea of red washed over banking stocks as bonds yields fell after Federal Reserve Chairman Powell downplayed the prospect of faster rate hikes following a widely expected U.S. interest rate rise.
Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) stocks closed lower, weighing on the broader market, as the United States 10-Year yields fell. Falling treasury yields limit net interest margin earnings for banks.
"The main thing where we might need to move along a little bit quicker [on monetary policy tightening] is if inflation surprises to the upside. We don't see that," Powell said.
The Fed delivered an upbeat assessment of the economy, hiking growth forecasts for this year to 3.1% in 2018, from 2.8% previously.
Losses in the broader market were exacerbated by a plunge in energy as oil prices reversed gains after data from the Energy Information Administration showed domestic crude inventories fell unexpectedly.
On the New York Mercantile Exchange, crude futures for November delivery fell 1% to settle at $71.57 a barrel.
Tech reversed intraday gains, prompting investors to take profits in the sector as GoPro (NASDAQ:GPRO) stock closed just 4.5% higher despite a double-digit rally intraday on the back of bullish Wall Street commentary.
Oppenheimer said the Gopro had turned a corner following a successful turnaround, insisting the camera maker "was it’s worth a second look based on the set-up and management’s turnaround efforts.”
Losses were limited, however, as health care stocks enjoyed an upbeat day on Wall Street, led by Alexion Pharmaceuticals (NASDAQ:ALXN) on an agreement to buy Syntimmune for a total value of up to $1.2 billion.
In merger news, Viacom (NASDAQ:VIAB) rose 4% as rumors swirled that merger talks with CBS Corporation (NYSE:CBS) resumed.
Homebuilders were unable to shake off fears for a slowdown in home buying activity on expectations that Fed rate hikes would push up mortgage rates.
KB Home (NYSE:KBH), Toll Brothers (NYSE:TOL) and DR Horton (NYSE:DHI) closed sharply lower, weighing on the broader real estate sector.
The slump in homebuilders arrived despite economic data showing a rebound in U.S. housing activity.
The Commerce Department said Monday new home sales rose 3.5% to a seasonally adjusted annual rate of 629,000 units last month.
Top S&P 500 Gainers and Losers Today:
IPG Photonics (NASDAQ:IPGP), American Airlines (NASDAQ:AAL) and Under Armour (NYSE:UA) were among the top S&P 500 gainers for the session.
Copart (NASDAQ:CPRT), Twitter (NYSE:TWTR) and Darden Restaurants (NYSE:DRI) were among the worst S&P 500 performers of the session.