US stock indexes waver following Fed announcement

U.S. stocks are wavering between small gains and losses Wednesday afternoon as investors size up the Federal Reserve's latest economic and interest rate policy update. The central bank's policymakers said they will likely raise rates one more time this year and will begin unwinding the Fed's...

U.S. stocks are wavering between small gains and losses Wednesday afternoon as investors size up the Federal Reserve's latest economic and interest rate policy update.

The central bank's policymakers said they will likely raise rates one more time this year and will begin unwinding the Fed's large portfolio of bonds next month. That sent bond yields and banks and other financial companies higher. High-dividend stocks like household goods makers and utilities fell. Income-seeking investors find those stocks less appealing when bond yields move higher.

Technology stocks were down the most. Several packaged food companies also declined.

KEEPING SCORE: The Standard & Poor's 500 index fell 1 point to 2,505 as of 3:40 p.m. Eastern Time. The Dow Jones industrial average edged up 6 points, less than 0.1 percent, to 22,377. The Nasdaq composite lost 13 points, or 0.2 percent, to 6,447. All three of those indexes hit record highs on Tuesday. The Russell 2000 index of smaller-company stocks was up 5 points, or 0.4 percent, to 1,446.

THE QUOTE: "The announcement was pretty much in line with what was expected," said David Chalupnik, head of equities at Nuveen Asset Management. "So far, the market is taking it in stride, but I don't know if it should. This will slowly impact growth."

FED WATCH: The Federal Reserve decided to leave its short-term benchmark interest rate between 1 percent and 1.25 percent, but policymakers said they still expect to increase the rate one more time this year and three times in 2018, if persistently low inflation rebounds. The Fed has modestly raised the rate four times since December 2015 after keeping it at a record low for seven years after the 2008 financial crisis.

The Fed also said Wednesday that it will begin to gradually unwind its $4.5 trillion balance sheet next month. The portfolio primarily consists of government and mortgage-backed bonds. That will gradually increase long-term borrowing rates.

FED BOOST: Banks and other financial companies were among the biggest gainers. The sector got a boost after the Fed announced that it will likely raise its key short-term interest rate one more time before the end of the year. Banks benefit from higher rates, which can translate into higher profits from lending money. Charles Schwab climbed 68 cents, or 1.6 percent, to $41.72. Hartford Financial Services Group rose 70 cents, or 1.3 percent, to $55.10.

BONDS: Bond prices fell after the Fed announcement. The yield on the 10-year Treasury note jumped to 2.27 percent from 2.25 percent late Tuesday. The rise in bond yields weighed on utilities, real estate companies and other bond proxies.

CURRENCIES: The Fed statement also gave a boost to the dollar, which climbed to 112.38 yen from 111.50 yen on Tuesday. The euro weakened to $1.1885 from $1.1997.

TECH SLIDE: Technology companies declined. Skyworks Solutions slid $5.83, or 5.4 percent, to $102.10. Apple fell $3.32, or 2.1 percent, to $155.41. Western Digital lost $4.38, or 4.9 percent, to $85.54.

BEYOND DISAPPOINTED: Shares in Bed Bath and Beyond plunged 16.2 percent after the home goods retailer reported that its latest quarterly sales at stores open at least a year, a key metric for retailers, fell short of analysts' forecasts. The stock lost $4.38 to $22.65.

HURRICANE IMPACT: The National Association of Realtors said that sales of previously occupied U.S. homes fell 1.7 percent in August. Sales were hurt by a worsening shortage of homes for sale, a trend exacerbated by the damage caused by Hurricane Harvey's strike on Texas and Louisiana last month. Over the past 12 months, U.S. home sales have risen only 0.2 percent. The report pulled down homebuilder shares. Hovnanian Enterprises was down the most, losing 5 cents, or 2.8 percent, to $1.71.

CLOUD CONCERNS: Adobe Systems fell 4.5 percent. While the business software company posted solid quarterly results, investors were concerned about the performance of its cloud business. The stock slid $7.01 to $149.59.

UNAPPETIZING RESULTS: General Mills tumbled 6.3 percent after the cereal maker's latest quarterly results fell short of Wall Street's expectations. The stock was down $3.48 to $51.90. General Mills' woes were weighing on other food companies. Kellogg was off $1.31, or 2 percent, to $64.56, while Campbell Soup lost $1.11, or 2.3 percent, to $46.21. J.M. Smucker shed $3.20, or 2.9 percent, to $106.31.

ENERGY: Benchmark U.S. crude added 93 cents, or 1.9 percent, to settle at $50.41 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, gained $1.15, or 2.1 percent, to $56.29 a barrel in London. Wholesale gasoline was little changed at $1.66 a gallon. Heating oil added 3 cents to $1.81 a gallon. Natural gas declined 3 cents to $3.09 per 1,000 cubic feet.

METALS: Gold gained $5.80 to $1,316.40 an ounce. Silver rose 6 cents to $17.33 an ounce. Copper held steady at $2.97 a pound.

MARKETS OVERSEAS: In Europe, Germany's DAX rose 0.1 percent, while the CAC 40 in France added 0.1 percent. The FTSE 100 index of leading British shares was flat. In Asia, Japan's Nikkei 225 added 0.1 percent and South Korea's Kospi slipped 0.2 percent. Hong Kong's Hang Seng index added 0.4 percent. Australia's S&P/ASX 200 fell 0.1 percent.

More in Home