Stocks close lower after Fed keeps rates unchanged
Stocks posted a seventh consecutive day of losses Wednesday as worries over the U.S. presidential election and weaker oil prices shook investor confidence.
Losses deepened after the Federal Reserve kept interest rates unchanged but signaled it could hike in December as the economy gathers momentum.
The Dow lost 77 points, or 0.43 percent. The Standard & Poor’s 500 shed 0.65 percent, and the Nasdaq slid 0.93 percent.
The last time the S&P 500 fell for seven straight days was November 2011, during a flare-up of the European sovereign debt crisis.
Like most of the public, investors have their eyes glued to the presidential race, as polls between Hillary Clinton and Donald Trump have tightened. The narrowing in the race has brought more uncertainty. Gold and bond prices have risen. The VIX, a volatility measure dubbed the “fear gauge” for Wall Street, jumped 14 percent on Tuesday to its highest level since June. It was up another 1 percent early Wednesday.
The Mexican peso, which has become a de facto proxy for Trump’s chances to win the election, has fallen steadily against the U.S. dollar since Friday. Investors expect that Mexico’s economy would be negatively impacted by a Trump administration.
“The lead-up to the U.S. presidential election was always expected to be lively but the events of the last couple of days has seriously taken its toll on investor sentiment,” said Craig Erlam, a senior market analyst at OANDA.
Aside from the election cliffhanger, investors are parsing through the latest policy statement from the Federal Reserve. While the nation’s central bank voted to keep rates at their current level after their two-day meeting, they left the door open to raise rates at their meeting in December.
It was expected the Fed would not want to raise rates ahead of the election. “However, if we get an unexpected election outcome, the Fed might put any increase on hold. We are not convinced that December is a sure thing,” said Brandon Swensen, a portfolio manager and co-head of fixed income trading at RBC Global Asset Management.
The yield on the 10-year Treasury note stood at 1.80 percent in afternoon trading, down from 1.83 percent the day before.
Video game publisher Electronic Arts jumped $3.47, or 4.5 percent, to $81.31 after the company’s quarterly results beat analysts’ expectations.
Brocade Communications rose $1.08, or 10 percent, to $12.33 after Broadcom announced it would buy the company for $5.5 billion. Broadcom rose $2.89, or 1.7 percent, to $171.69.
U.S. benchmark crude oil sank $1.48 to $45.19 a barrel in New York. Brent crude, the international standard, was down $1.44 at $46.70 a barrel. That helped send energy stocks down more than the rest of the market. Chevron dropped $1.72, or 1.6 percent, to $104.80, the biggest loss in the Dow Jones industrial average.
The dollar fell to 103.28 yen from 103.97 yen, while the euro rose to $1.1094 from $1.1062.
Precious and industrial metals futures closed mostly higher. Gold increased $20.20 to $1,308.20 an ounce, silver climbed 28 cents to $18.69 an ounce and copper was little changed at $2.23 a pound.