Stocks closed lower on Wall Street Wednesday after a rally following the Federal Reserve’s latest interest rate policy update faded in the final hour of trading.
The S&P 500 fell 0.5% after having been up 0.6% following the 2 p.m. Eastern time Fed announcement. The central bank signaled it will keep interest rates near zero into 2023 and issued a slightly less dire outlook for economic growth and unemployment this year.
The Fed’s decision to leave rates unchanged had been widely expected by Wall Street and continues the central bank’s policy of unprecedented support for financial markets since the pandemic knocked the economy into a recession.
“The Fed confirmed what we all thought, rates at 0% are here to stay, probably for years,” said Ryan Detrick, chief market strategist for LPL Financial. “A better economy and a dovish Fed, that is a nice combo.”
The S&P 500 lost 15.71 points to 3,385.49. The Dow Jones Industrial average rose 36.78 points, or 0.1%, to 28,032.38. It had earlier been up by 369 points. The Nasdaq composite lost 139.85 points, or 1.3%, to 11,050.47.
Smaller stocks rose more than the rest of the market, and the Russell 2000 index of small-caps gained 14.17 points, or 0.9%, to 1,552.33.
The market’s pullback snapped a three-day winning streak for the S&P 500, which is down 3.3% so far this month after five straight monthly gains.
A report on Wednesday showed that U.S. retail sales strengthened less than economists expected last month. Part of the shortfall is likely because unemployed workers are no longer getting the $600 boost to their weekly checks that had been coming from the federal government.
Technology stocks led the slide Wednesday, outweighing gains in financial, industrial and energy companies. The pullback in tech stocks marks a reversal from the first two days of this week, when the sector rebounded from a tumultuous two-week sell-off. Gains by big tech stocks have helped drive the market’s stunning rebound this year, most recently carrying the S&P 500 to a record high on Sept. 2.
FedEx rose 5.8% after reporting stronger profit growth for the latest quarter than analysts expected. The boom in online shopping caused by the coronavirus pandemic has helped lift its revenue. The company said that the growth it expected to see over the next three to five years has happened in just three to five months.
Treasury yields dipped following the retail sales report, but inched higher after the Fed statement. The yield on the 10-year Treasury rose to 0.69% from 0.68% late Tuesday.
Cloud data storage startup Snowflake doubles in debut
Snowflake, a data storage provider, kicked off a frenzied phase of technology initial public offerings Wednesday when its stock opened at more than double its listing price and then soared in early trading, in a sign of Wall Street’s appetite for fast-growing companies.
The company opened at $245 a share on the New York Stock Exchange, up from $120 set by its bankers, and then shot up to as high as $319 before closing at $254. The listing, which valued Snowflake at $70.4 billion, was the largest so far this year and the largest ever for a software maker, according to Renaissance Capital, which tracks IPOs. It was also a major payday for Snowflake’s venture capital investors, who had valued the startup at $12.4 billion just seven months ago.
Snowflake is among several prominent tech companies that are expected to list their shares in the coming months as the tech industry thrives amid the pandemic-induced economic downturn. After a lull in IPOs during the volatile early months of the coronavirus crisis this spring, new listings roared back over the summer and have accelerated in recent weeks, even as tech stocks hit some recent turbulence.
Other companies are also rushing to get out before the Nov. 3 election, which could lead to more volatility. They include Airbnb, the home rental company; DoorDash, the on-demand delivery provider; Wish, an e-commerce site; Palantir, a data analytics startup; OpenDoor, a real estate marketplace; and Asana, a collaboration software provider.
Compiled from Associated Press and New York Times reports.