The 10 point gain made in the Dow today may suggest that investors are taking a breath after such a strong run-up yesterday.  But it’s not at all what happened.  The chart clearly shows that we were back to volatility as usual with the index up and down all day in a 200 point range and, though it was in the red in the beginning and end of the session, at least it closed near break-even.  Everyone was looking at the Fed today and nothing unexpected happened; they said what we knew they would say – they’re keeping an eye on drags on growth but are still looking at another rate increase next month.  Is that really a hawkish position?  Some investors think so.  Bank stocks were up in anticipation of the December hike.  But mostly everyone is now back to wait-and-see mode on the trade war and volume, though by any other standard would be called high at 7.2 billion, is anemic by the standards of recent weeks. 

thu  NOVEMBER 8, 2018 / 5:51 pm 

Wall Street falls after Fed statement, energy shares tumble

Sinéad Carew

DJ:  26,191.22  +10.92       NAS:  7,530.88  -39.87          S&P:  2,806.83  -7.06        11/8

NEW YORK (Reuters) - The S&P 500 and Nasdaq closed slightly lower on Thursday after a Federal Reserve statement, and energy stocks were the biggest drag on the S&P as U.S. crude oil prices fell.  The U.S. central bank said after its two-day meeting that strong job gains and household spending were keeping the economy on track but business investment “moderated from its rapid pace earlier in the year,” creating a possible drag on future economic growth.  Aside from the comment about business investments, the Fed statement was largely as expected and suggested to investors that the Fed’s next rate hike would be in December. But some investors had hoped for a change in tone after October’s market sell-off.

“The Fed has recognized that there is one part of the economy that is slowing a little bit, but it is not deterring them from their ‘gradual increase’ language. Not yet anyway,” said Jamie Cox, managing partner at Harris Financial Group, Richmond, Virginia.  “There is really nothing to point to what the market had hoped, that there would be a more dovish stance. So I think this is more of what we call a hawkish hold.” 

The Dow Jones Industrial Average .DJI rose 10.92 points, or 0.04 percent, to 26,191.22, the S&P 500 .SPX lost 7.06 points, or 0.25 percent, to 2,806.83 and the Nasdaq Composite .IXIC dropped 39.87 points, or 0.53 percent, to 7,530.89.  The three indexes had all risen 2 percent in the previous day’s session due to a relief rally once the U.S. midterm congressional elections were in the rearview mirror. 

Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey said companies were holding off on spending because of uncertainty over a U.S.-China trade war.  “A slowdown in business spending can slow the underpinning of the stock market,” Krosby said. “Is the Fed data-dependent or is it maintaining a rigid schedule for rate hikes in 2019? What would cause the Fed to pause? It’s clear from this statement today that they’re looking at anything that could potentially slow the economy.”

The S&P bank index .SPXBK ended the day with a 0.4 percent gain as U.S. Treasury yields rose because bank profits benefit from rising rates.  Energy stocks were the S&P’s biggest drag with a 2.2 percent drop as U.S. crude oil futures CLc1 confirmed a bear market, falling more than 20 percent from their Oct. 3 high as investors focused on swelling global crude supply, which is increasing more quickly than many had expected. [O/R]  The Wall Street Journal reported that Saudi Arabia’s top government-funded think-tank is studying the possible effects on oil markets of a breakup of OPEC in a story citing unnamed people familiar with the matter. 

Declining issues outnumbered advancing ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored decliners.  The S&P 500 posted 33 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 76 new highs and 81 new lows.

On U.S. exchanges 7.23 billion shares changed hands compared with the 8.43 billion average for the last 20 sessions.