Wall Street briefly pares losses after Fed decision

By April Joyner

NEW YORK (Reuters) - U.S. stocks briefly rose but returned to negative territory on Wednesday after the Federal Reserve left interest rates unchanged in its policy announcement.

The Federal Open Market Committee unanimously decided to keep its lending rate in a target range of between 1.50 percent and 1.75 percent. It expressed a confident economic outlook, saying activity had expanded at a moderate rate and that inflation was close to its 2 percent target. The Fed is expected to increase rates in June.

U.S. stocks moved higher immediately after the Fed's announcement. The Dow and S&P 500 gave up their gains later in the session.

 

Investors focused on the Fed's description of its inflation target as "symmetric," which they said signalled the Fed's willingness to stick to its projected pace of interest rate increases even if the rate of inflation were to move slightly beyond 2 percent.

"The market is not making a big move because this is basically as anticipated," said Steven Violin, senior vice president and portfolio manager of F.L. Putnam Investment Management Company in Wellesley, Massachusetts. "The ability to tolerate a bit of an overshoot on inflation, perhaps there is a dovish tilt, but there is no dramatic change in policy here."

The Dow Jones Industrial Average <.DJI> fell 22.86 points, or 0.09 percent, to 24,076.19, the S&P 500 <.SPX> lost 3.05 points, or 0.11 percent, to 2,651.75 and the Nasdaq Composite <.IXIC> added 17.08 points, or 0.24 percent, to 7,147.79.

Apple Inc rose 5.0 percent after it late Tuesday posted resilient iPhone sales in the face of waning global demand and promised $100 billion in additional stock buybacks.

Optics firm Lumentum Holdings Inc , an Apple supplier, also climbed 10.3 percent after reporting quarterly results earlier on Wednesday.

Mastercard Inc rose 3.4 percent after it reported a better-than-expected quarterly profit, boosted by higher consumer spending on credit and debit cards.

On the other end of the spectrum was Snap Inc , whose shares plunged 21.6 percent after the Snapchat owner fell short of Wall Street forecasts for revenue and regular users.

Biotechnology stocks also took a hit as shares of Gilead Sciences Inc dropped 7.3 percent after the company reported a lower quarterly profit on falling sales of its flagship hepatitis C drugs.

Shares of insurers MetLife Inc , American International Group and Prudential Financial Inc declined after disability insurance provider Unum Group reported a lower-than-expected profit. Unum shares fell 16.6 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.74-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 76 new highs and 40 new lows.

(Additional reporting by Sruthi Shankar in Bengaluru, Sinead Carew and Chuck Mikolajczak in New York; Editing by Shounak Dasgupta, Chizu Nomiyama and Jonathan Oatis)