Business: After the Fed's interest rate hike, Wall Street was divided

The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point and said it would begin trimming its bond holdings next month as a further step in the battle to lower inflation. The U.S. central bank set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision, with further rises in borrowing costs of perhaps similar magnitude likely to follow.

After the Federal Reserve announced its widely anticipated interest-rate hike, the largest since 2000, Wall Street markets were mostly flat on Wednesday. Stocks rose at first, then fell. The Dow and S&P 500 both rose little, while the Nasdaq fell marginally. Trading was choppy ahead of Fed Chair Jerome Powell’s 2:30 p.m. ET press conference. Investors are waiting for new information on how far and how fast the central bank is willing to go to reduce decades-high inflation.

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Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off. At 2:26 p.m. ET, the Dow Jones Industrial Average rose 124.57 points, or 0.38%, to 33,253.36, the S&P 500 gained 8.29 points, or 0.20%, to 4,183.77 and the Nasdaq Composite dropped 37.20 points, or 0.3%, to 12,526.56.

Lyft Inc shares plummeted by 33.3% amid concerns about the company’s ridership and spending. The ride hailing company reported first-quarter revenue of $875 million, a 44% increase over the previous year, while the number of active riders missed analyst expectations. Nine of the 11 major S&P sectors rose, with energy and utilities leading the gains.

Bank stocks were up 0.7% after U.S. Treasury two-year yields, the most sensitive to the Federal Reserve’s interest rate outlook, soared to their highest since Nov 2018. The benchmark 10-year yield topped 3% for a third consecutive day. Declining issues outnumbered advancing ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.72-to-1 ratio favored decliners. The S&P 500 posted two new 52-week highs and 37 new lows; the Nasdaq Composite recorded 24 new highs and 341 new lows.

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