One day after a spectacular rally despite a hike in interest rates, investors reconsidered their enthusiasm and dipped into the market for some profits and a little reflection.
The Dow Jones Industrial Average lost 49.24 to 10883.09, or 0.45%. The NASDAQ Composite Index, dipped 26.13, or 0.79%, to 3269.39. The Standard & Poor’s 500 Index was down 9.32 to 1410.71, loss of 0.66%. The Russell 2000 Index of small companies added 0.19 to close at 457.07.
Declining issues outnumber decliners by a 3:2 margin on the New York Stock Exchange where more than 938 million shares were swapped in heavy trading.
U.S. stocks suffered amid renewed concern that inflation has not been vanquished and that the Federal Reserve may have more interest rate hikes on its agenda. On Tuesday, the Fed’s Open Market Committee raised the interest rate on over-night loans between banks by a quarter point to 5.5%.
An inflation report released today showed October matched September’s pace, which had reached a 30-month high. This coupled with an increase in housing starts and a spike in the price of crude oil put investors on alert that the Fed may not be through with its interest rate increases.
Financial companies to the biggest hit during Wednesday’s decline. American Express (NYSE: AXP) dropped 4 7/8 to 154 7/8, more than a 3% loss. J.P. Morgan & Co. (NYSE: JPM) was off 2.5, or 1.76%, to 139. Citigroup (NYSE: C) was down 1 5/8 to 56 3/8, or 2.8 percent.
Tech stocks on the Dow also slipped. Microsoft Corp. (NASDAQ: MSFT) was down 2 5/16, or 2.65%, to 85. Intel (Nasdaq: INTC) slipped 1 13/16 to 74, or 2.37%. IBM (NYSE: IBM) dipped 1 to 93 1/8, down 1.59%. Hewlett-Packard (NYSE: HWP) was a rare tech gainer in the blue chips, up more than 5% to 80.
Crude oil prices for December delivery rose 3.5 percent, or 90 cents, to $26.60 a barrel on the New York Mercantile Exchange. This was crude’s highest closing price in almost three years, and reflect a 7 percent rise this week. Crude oil prices have more than doubled since January 1.