Stock market today: Dow ends down as Fed hikes, Powell shoots down rate-cut bets

© Reuters.

By Yasin Ebrahim

Investing.com -- The Dow closed lower Wednesday after sharply cutting intraday gains as Federal Reserve chairman Jerome Powell dismissed market bets on a rate cut following the central bank’s widely expected quarter-point rate hike.

The Dow Jones Industrial Average slipped 1.6% or 530 points.The Nasdaq fell 1.6%, and the S&P 500 fell 1.66%.

The Federal Reserve lifted rates by 0.25% and signaled at least one more hike this year, but Fed chair Jerome Powell was quick to dismiss any rate cuts this year.

“FOMC participants don't see rate cuts this year, it is not our baseline expectations," Powell said at the press conference that followed the monetary policy decision and updated projections.

Ahead of Powell’s comments, market participants were forecasting rate cuts later this year.

Banks were back in the firing line, paced by a decline in First Republic Bank as investors were forced to rethink rate cuts that some believed were needed to help restore confidence in the banking system.

First Republic Bank (NYSE:FRC) fell almost 16%, Comerica (NYSE:CMA) fell 8.5% and Lincoln National Corporation (NYSE:LNC) fell almost 8%.

As Treasury yields moved off session lows, rate-sensitive sectors of the market including tech lost momentum.

Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Microsoft Corporation (NASDAQ:MSFT) ended the day below session highs.

GameStop Corp (NYSE:GME), however, bucked the trend lower, racking up a 35% gain on the day after delivering a surprise fourth-quarter profit. 

Some on Wall Street, however, flagged low margin growth as a concern as cost cuts played a large role in helping the company return to profit. 

"The company exceeded consensus EPS estimates primarily from cost control. Although we applaud management for its successful cost-cutting in the January quarter, it is worth noting that operating income of $46.2 million reflected a margin of just 2.1%," Wedbush said in a note. 

Nike Inc (NYSE:NKE), meanwhile, reported fiscal third-quarter results that beat expectations, but softer than expected sales in its key China market weighed.

"China came in just below Street forecasts, but still grew 1% cFX YOY as the company experienced a rebound in January post the COVID-19 disruptions in December and noted 'strong retail momentum' around Chinese New Year accelerating into February," Credit Suisse said in a note.