The U.S. stock markets declined today as investors evaluate the impact of the interest rate hike by the Federal Reserve. They are reviewing the prospects of the global economy.
The Dow Jones Industrial Average (DJIA) declined 2.12% to 17, 125.45 points. The S&P 500 dropped 1.79% to 2,005.4 and the NASDAQ fell 1.59% to 4,923.08 points.
No Santa Claus rally
Ross Yarrow, director of U.S. equities at Robert W. Baird & in London, told Bloomberg that investors are now focused on the worries next years after the Fed’s interest rate hike. He said, “There’s no huge reason for people to be putting money to work between now and the end of the year.”
Troy Gayeski, a senior portfolio manager at Skybridge Capital, noted that the stock markets recorded huge gains when the central bank decided to raise the interest rates. However, he emphasized that investors may have changed their sentiments if the equities continue to decline. According to him, investors are probably thinking there will be no Santa Claus rally and decided to “de-risk and become more conservative.”
Federal Reserve Chairperson Janet Yellen reiterated her confidence on the U.S. economy. According to her, “Americans should realize that the Fed’s decision today reflects our confidence in the U.S. economy. While things may be uneven across regions of the country and different industrial sectors, we see an economy that is on a path of sustainable improvement.”
Yesterday, the U.S. Department of Labor reported that the number of people who applied for unemployment benefits declined by 11,000 to 271,000 for the week ended December 12.
Chris Rupkey, chief financial economist at MUFG Union Bank, commented that the continued strength of the U.S. labor market was the primary factor for the interest rate hike. He said, “The Fed has achieved the employment part of its dual mandate and this is what triggered the rates lift off.”
Stock market decliners and gainers
The stock price of Carnival Corp (NYSE:CCL) increased more than 3% to $52.41 per share. The company posted quarterly earnings of $0.50 per share, higher than the $0.09 per share expected by analysts. Its revenue was $3.71 million, slightly lower than the $3.72 million consensus estimate.
Darden Restaurants (NYSE:DRI) gained more than 7% to $62.64 per share. The company reported better than expected financial results for the second quarter ended November 29. Darden Restaurants said its total sales increases 3.2% to $1.61 billion, and earnings were $0.23 per share.
The shares of Williams Companies (NYSE:WMB) plummeted more than 9% to $21.53 each despite receiving a solid Buy rating from analysts at Jefferies. The equity research firm has a price target of $43 per share on the stock.
The stock value of Weatherford International (NYSE:WFT) declined more than 8% to $7.87 per share. Zacks Equity Research issued a short-term Hold rating on the stock.
