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U.S. stocks post weekly loss amid Fed decision, economic data

2019-09-22 03:09

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NEW YORK, Sept. 21 (Xinhua) -- U.S. equities reported negative weekly results as investors digested the Federal Reserve's latest decision on interest rate and a slew of key economic indicators.

In the week ending Sept. 20, the Dow shed 1.05 percent, the S&P 500 declined 0.51 percent, and the Nasdaq pulled back 0.72 percent.

U.S. Federal Reserve on Wednesday lowered interest rates by 25 basis points amid growing risks and uncertainties stemming from trade tensions and a global economic slowdown, following a rate cut in July that was its first in more than a decade.

The Federal Open Market Committee (FOMC), the Fed's rate-setting body, trimmed the target for the federal funds rate by 25 basis points to a range of 1.75 percent to 2 percent after concluding its two-day policy meeting, largely in line with market expectation.

Despite strong labor market and robust growth in household spending, "business fixed investment and exports have weakened," the FOMC said in a statement.

Five FOMC participants at the meeting this month don't support two rate cuts this year, according to the latest FOMC participants' assessments of appropriate monetary policy, which was also released on Wednesday. Not all participants have voting rights.

Seven out of the 17 Fed officials expect one more rate cut this year, and the central bank's median forecasts for rates suggested no more cut this year, as the "dot plot" showed.

"Our eyes are open, we're watching the situation," Fed Chairman Jerome Powell said at a press conference Wednesday afternoon, without specifying the Fed's next move."I'd love to be able to articulate a simple, straightforward, stopping rule, but it'll be when we think we've done enough."

"The market doesn't like uncertainty and although the much anticipated quarter of a point cut was put into play, it seems as though the FOMC is a house divided when it comes to making decisions regarding the way forward," Mark Otto, an experienced trader at the New York Stock Exchange, told Xinhua, while commenting on the market reaction to the Fed decision.

"It is a double-edged sword that we are dealing with," he said, adding that "it's easier to make predictions when the Fed consistently uses dovish language that leads us to believe that they are ready and waiting to support the economy in an accommodating manner."

Calling "the Fed communication is tricky," Chris Low, chief economist at FTN Financial, said in a note on Wednesday that a 50 basis points cut would be preferable as it would come closer to normalizing the curve, "but the Fed is hung up on moving slowly, despite its own advice to the contrary when operating in a low rate environment."

On the economic front, U.S. industrial production rose 0.6 percent in August after declining 0.1 percent in July, the Federal Reserve reported Tuesday.

Wall Street had expected a 0.4 percent increase, according to a MarketWatch survey.

Meanwhile, in the week ending Sept. 14, U.S. initial jobless claims, a rough way to measure layoffs, registered 208,000, an increase of 2,000 from the previous week's revised level, the Department of Labor reported Thursday. Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 215,000.

U.S. total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.3 percent from July to a seasonally adjusted annual rate of 5.49 million in August, according to the National Association of Realtors. The reading beat market consensus.
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