Stock market turns lower after cautious view from the Fed

“Fundamentally these factors should dim the prospects of future rate hikes, but with ongoing discussions suggesting that the Fed made a mistake by raising US rates in the first place, it seems likely that the minutes may adopt a hawkish bias similar to December in an attempt to retain credibility and prevent further disruption in the financial markets”, said Lukman Otunuga, research analyst at FXTM, in a note. Treasuries slipped with the dollar. In 13.49pm trading, the Standard & Poor’s 500 Index added 0.2%.

Jan 27 Apple’s tepid forecast and a renewed slide in oil prices pulled Wall Street lower on Wednesday, ahead of the Federal Reserve’s statement on monetary policy. Brent crude, the benchmark for global oils, rose $1.06, or 3.3 per cent, to $32.86 $33.34 a barrel in London. In addition to lowering its view of the USA economy, the Fed didn’t say if it will respond to those and other concerns by slowing down its planned increases in interest rates. “The market will be on hold, waiting for the Fed statement. At least investors will have time to think and reassess valuations”. Investors hoped that crude production would be cut, helping to alleviate a global glut of oil.

Apple dropped 4% after forecast its first sales decline since 2003.

Earlier in the session, a negative reaction to earnings news from Boeing (BA) and Apple (AAPL) weighed on the major averages.

“Inflation is expected to remain low in the near term”, The Fed said.

In other markets, the Stoxx Europe 600 rose 0.3%.

Drugmaker Biogen rose after it reported strong fourth-quarter results, including improving sales of its multiple sclerosis drug Tecfidera improved. Shares fell 6.6%. Inventories surged by 11.4 million barrels last week, the industry-funded American Petroleum Institute was said to report.

Data released earlier showed German consumer confidence looked set to steady in February.

Oil prices have been extremely volatile over the months, setting the tone in stock and bond markets. Visit MarketWatch.com for more information on this news. That dragged its stock down nearly 8%. The yield on similar-maturity Spanish bonds declined two basis points to 1.62%. The vote was 10-0. With the drop, the index fell to its lowest closing level in well over a year.

The Fed stressed it is closely monitoring global economic and financial developments and reiterated its expectation that economic conditions will evolve in a manner that warrant only gradual rate increases. That’s shrunk to about one, and traders see a one-in-four chance the Fed will raise rates at its meeting in March, down from 51% at the start of this year, data compiled by Bloomberg show.

The Canadian dollar was up slightly at 70.94 cents US. On the Dow, Chevron and ExxonMobil lost a respective 1.2 per cent and 1.6 per cent. The currency jumped 0.9% in its fourth day of gains, the longest rally since September. After the bell, Facebook posted fourth-quarter revenue above expectations and its stock rose 4.7 per cent. Declining issues outnumbered advancing ones on the NYSE by 1,900 to 1,145. Gulf shares rebounded, with Saudi Arabia’s Tadawul All Share Index rising 1.1% and Dubai’s DFM General Index climbing 2%. The Shanghai Composite Index fell 4 percent by midday before recovering to end down 0.5 percent, adding to Tuesday’s 6.4 percent loss. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 0.8%.