San Francisco Frontiers - Dollar gains, US stocks fall as Fed hikes rates again

The US central bank raised the benchmark lending rate by 0.75 percentage point, the fourth straight increase of that size and the sixth hike this year.

The move was expected, but markets were fixated on signals on whether the Fed might undertake smaller hikes in December and at future meetings. Equities had rallied in October in part due to hopes for a Fed pivot.

But after rising on the Fed's policy statement, equities tumbled into the red during the press conference when Fed Chair Jerome Powell said it was "very premature" to discuss pausing rate increases and brushing back criticism that the central bank had "overtightened."

FHN Financial's Chris Low noted that Powell indicated that in order to tame inflation, interest rates would need to settle at a higher level than previously thought.

"The biggest takeaway was not the expected strong hint at a slower pace," Low said. "It was the realization rates would have to go higher."

Stocks gave up their gains and turned negative before finishing the day firmly lower.

The S&P 500 dropped 2.5 percent, while the dollar also reversed course, finishing higher against the euro and pound.

The Fed's aggressive rate hikes this year so far have not had a noticeable impact on prices, but they have stoked fears of an impending recession even as the job market remains strong.

While the US housing market has cooled sharply amid higher interest rates, key inflation measures show prices continue to rise and the labor market remains tight, with job openings rising and private hiring accelerating in October.

Elsewhere, London equities shed 0.6 percent on the eve of another expected large rate increase from the Bank of England.

In the eurozone, Frankfurt and Paris fell following weak eurozone manufacturing survey data and a dip in German exports.

In Asia, stocks were mixed. Hong Kong led gainers -- extending the previous day's surge -- as traders remain hopeful China could begin rolling back its economically painful zero-Covid policy, the day after an unverified statement suggesting a shift was taking place.

Among individual companies, Boeing gained 2.8 percent as executives outlined a plan to return to financial strength in the 2025-26 timeframe after a lengthy slump due to the 737 MAX and Covid-19 crises.

- Key figures around 2100 GMT -

New York - Dow: DOWN 1.6 percent at 32,147.76 (close)

New York - S&P 500: DOWN 2.5 percent at 3,759.69 (close)

New York - Nasdaq: DOWN 3.4 percent at 10,524.80 (close)

London - FTSE 100: DOWN 0.6 percent at 7,144.14 (close)

Frankfurt - DAX: DOWN 0.6 percent at 13,256.74 (close)

Paris - CAC 40: DOWN 0.8 percent at 6,276.74 (close)

EURO STOXX 50: DOWN 0.8 percent at 3,622.01 (close)

Tokyo - Nikkei 225: DOWN 0.1 percent at 27,663.39 (close)

Hong Kong - Hang Seng Index: UP 2.4 percent at 15,827.17 (close)

Shanghai - Composite: UP 1.2 percent at 3,003.37 (close)

Euro/dollar: DOWN at $0.9816 from $0.9883 on Tuesday

Pound/dollar: DOWN at $1.1390 from $1.1486

Dollar/yen: DOWN at 147.90 yen from 148.23 yen

Euro/pound: UP at 86.17 pence from 85.96 pence

Brent North Sea crude: UP 1.6 percent at $96.15 per barrel

West Texas Intermediate: UP 1.8 percent at $90.00 per barrel

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Q.Nelson--SFF