US stocks tumble as Fed minutes revive interest rate fears

US stocks tumble as Fed minutes revive interest rate fears

NYSE Feb21
Traders work on the floor of the New York Stock Exchange. (Spencer Platt/Getty Images/AFP)

NEW YORK: Wall Street stocks tumbled into negative territory on Wednesday (Feb 21) after the minutes of the last Federal Reserve meeting revived worries about higher interest rates.

The Dow Jones Industrial Average lost 166.97 points (0.67 per cent) to close at 24,797.78.

The broad-based S&P 500 shed 14.93 points (0.55 per cent) to end the session at 2,701.33, while the tech-rich Nasdaq Composite Index dipped 16.08 points (0.22 per cent) to 7,218.23.

US stocks were in positive territory most of the session, but began falling about 40 minutes after the Fed released the minutes of last month's policy meeting. 

The report showed central bankers believe the recent tax cuts could juice the economy more than expected in the near term, meaning further interest rate hikes likely will be needed.

The minutes kept the Fed on track to hike rates in March, which is "not new news, but confirmation" of expectations, said Art Hogan, chief market strategist at Wunderlich Securities.

Hogan said the weakness in equities coincided with a jump in the yield of the 10-year Treasury bond to a four-year high, reviving worries that higher rates could crimp growth and potentially prod more investors to exit equities in favor of bonds.

"I would expect volatility is going to be more the norm than the exception," Hogan said.

Walmart was again the biggest loser in the Dow, shedding another 2.8 per cent following Tuesday's disappointing earnings report that led to the retail giant's worst day on Wall Street in more than 30 years.

Several other leading retailers lost more than one per cent, including Home Depot and Best Buy.

The Dow's biggest gainer was United Technologies, which advanced 2.2 per cent after its Pratt & Whitney division said it found a solution to problems with an aircraft engine that has led to the grounding of some Airbus 320 planes.

Source: AFP/de