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U.S. stocks closed lower on Wednesday, 19 December 2018 after Federal Reserve Chairman Jerome Powell's press conference that followed the central bank's decision to raise interest rates by 25 basis points, while lowering the median forecast for rate hikes in 2019 to two hikes from three previously.

The Dow Jones Industrial Average fell 351.98 points, or 1.5%, to 23,323.66, while the S&P 500 index fell 39.2 points, or 1.5%, to 2,506.96. The Nasdaq Composite Index tumbled 147.08 points, or 2.2%, to 6,636.83. At its highs early Wednesday, the Dow had risen 381.7 points, the S&P was up 39.13 points, while the Nasdaq had advanced 84.95 points at its peak. At its lows Wednesday afternoon, the Dow had fallen 513 points, the S&P 57.2 points, while the Nasdaq fell as much as 197.41 points at its nadir.

Every sector was driven lower after the Fed decision and they all ended the day in negative territory with losses ranging from 0.2% to 2.2%.

U.S. stocks fell sharply after the Fed announced its fourth interest-rate increase of the year, hiking the federal funds rate by 25 basis points to a range of 2.25% to 2.5%, and deepened those losses during a press conference where Powell explained the decision and accompanying forecasts.

The policy statement was perceived as slightly more dovish than the central bank's previous stance, as it modified its language to suggest it may be less aggressive in raising rates next year, while a survey of FOMC members shows the median voter expects two more rate hikes next year, rather than three hikes predicted at the Fed's September meeting.

Among stocks under focus, shares of FedEx Corp. closed 12.2% lower on Wednesday, after the logistics company announced Tuesday evening that it was lowering its guidance for 2019 and that it was starting a voluntary buyout program for some U.S. workers. Facebook stock was in focus after the New York Times reported that the company shared user data with large tech companies to a greater degree than it had previously disclosed. The stock fell 7.3% Wednesday.

The Federal Reserve on Wednesday, after gold futures settled, said it decided to hike its target for the federal-funds rate by a quarter point to a range between 2.25% and 2.5%. The central bank also said, however, that it has now penciled in two rate hikes in 2019, not the three moves seen in September, and it still forecasts just one more hike for 2020.

Reviewing today's economic data, which included Existing Home Sales for November, the weekly MBA Mortgage Applications Index, and the Current Account Balance for Q3, existing home sales increased 1.9% month-over-month in November to a seasonally adjusted annual rate of 5.32 million (consensus 5.20 million). Total sales were 7.0% lower than the same period a year ago. The key takeaway from the report is that while sales have now increased for two consecutive months, the trajectory remains challenged by higher mortgage rates and limited affordability. The weekly MBA Mortgage Applications Index fell 5.8%, compared to the 1.6% increase in the prior week.

Separately, the current account deficit for the third quarter totaled $124.8 billion (consensus -$126.0 billion). The second quarter deficit was revised to $101.2 billion from $101.5 billion.

Bullion prices ended higher at Comex on Wednesday, 19 December 2018. Gold prices climbed on Wednesday, holding ground at their highest finish since July, then pulled back in the wake of the Federal Reserve's decision to lift a key interest rate, as had been expected.

Ahead of the Fed news, gold for February delivery on Comex rose $2.80, or 0.2%, to settle at $1,256.40 an ounce. That was the highest finish for a front-month contract since 10 July 2018. Prices have gained about 2.4% month to date. March silver SIH9, -1.03% added 11.7 cents, or 0.8%, to $14.818 an ounce.

Crude oil futures finished higher on Wednesday, 19 December 2018 buoyed by a third straight weekly decline in U.S. crude supplies and a drop in distillate stocks, after a price plunge a day earlier pushed the U.S. benchmark down to its lowest finish in nearly 16 months.

January West Texas Intermediate crude rose 96 cents, or 2.1%, to settle at $47.20 a barrel on the New York Mercantile Exchange after a high of $48, with the contract paring some of its earlier gains after the Federal Reserve announced its decision Wednesday to raise a key interest rate, as expected.The contract settled at $46.24 a barrel on Tuesday, the lowest finish for a front-month contract since Aug. 2017. The January futures contract expired at the day's settlement. February WTI crude which is now the front-month contract, settled at $48.17, up $1.57, or 3.4%.

The sell-off in the stock market prompted a flight to safety in U.S. Treasuries, pushing yields lower. The yield curve also flattened with the Fed-sensitive 2-yr yield losing two basis points to 2.64%, and the benchmark 10-yr yield losing five basis points to 2.78%.

Looking ahead, investors will receive weekly Initial and Continuing Claims, the Philadelphia Fed Index for December, and the Conference Board's Leading Economic Index for November on Thursday.

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