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Stocks close lower after Fed hints at more rate hikes

CNBC logo CNBC 10/17/2018 Fred Imbert
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Stocks ended lower Wednesday after a summary of the Federal Reserve’s most recent meeting showed the central bank is leaning toward more interest rate hikes.

The Dow lost 91 points, while the S&P 500 and Nasdaq closed just below the flatline. 

According to the minutes from the Fed’s September meeting, the central bank remains convinced it needs to tighten monetary policy to keep the economy steady.

The 10-year Treasury note yield traded around 3.17 percent after the minutes were released. Goldman Sachs rose 3.1 percent while Morgan Stanley surged 3.1 percent. Bank of America, J.P. Morgan Chase and Citigroup all rose more than 1 percent. 

The major indexes traded in a wide range before the minutes were released as investors grappled with a flood of corporate earnings and weakness in the housing market. 

“We have a market that’s gyrating, trying to find a bottom,” said Tom Essaye, founder of The Sevens Report. “This will continue until earnings reaffirm the outlook for next year.”

“Bottoms are a process, not events,” Essaye added. “It usually take several days and sometimes several weeks.” 

Netflix posted third-quarter earnings that easily beat expectations. The big beat was driven by stronger-than-expected subscriber growth in both the U.S. and overseas. Its stock rose. 

CSX and Cree also reported better-than-expected earnings Tuesday after the close, while M&T Bank and U.S. Bancorp’s results topped estimates Wednesday before the bell. 

However, a weaker-than-expected report from IBM sent the stock down more than 6 percent and reignited worries about earnings moving forward. 

Overall, the earnings season is off to a good start. Of the S&P 500 companies that have reported thus far, 88.5 percent have topped analyst expectations, according to FactSet.

Wednesday’s moves come a day after the major indexes posted their best day since March, boosted by strong earnings. On Tuesday, the Dow surged more than 500 points as Goldman Sachs, Johnson & Johnson, and UnitedHealth jumped. Tuesday’s jump helped Wall Street recover some of the steep losses from last week. The Dow and S&P 500 fell more than 4 percent last week, while the Nasdaq lost 3.7 percent. 

On the data front, housing starts fell 5.3 percent last month, more than expected.

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