U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve’s tightening policy will throttle economic growth.

The S&P 500 Index dropped 1.5 per cent after policy makers raised rates for the fourth time this year and lowered their forecast for hikes next year to two from three. Markets had been priced for just one. Treasury yields slid and the dollar erased losses as Powell said the Fed’s balance sheet normalization would continue “on automatic pilot.”

In Canada, the S&P/TSX Composite ended Wednesday down 152.83 points at 14,264.06.

Investors had anticipated a less aggressive approach after U.S. stocks tumbled into a correction amid concern that global growth is slowing.

“This hike is a vote of confidence in our economy for 2018, but essentially that’s a wrap,” said Mike Loewengart, vice president of investment strategy for E*Trade Financial Corp. “We’re now in some uncharted territory as 2019 comes into focus.”

Amid the recent volatility in stocks and other risky assets, President Donald Trump had stepped up pressure on the central bank to avoid more tightening in the runup to the announcement. Powell said today that political considerations play no role in Fed policy.

The tech-heavy Nasdaq indexes underperformed Wednesday as Facebook Inc. tumbled as much as 7 per cent on mounting concerns over user privacy. FedEx Corp. sank as much as 12 per cent after its executives warned that signs of a global trade slowdown are emerging.

Beyond the Fed, trade and politics remain dominant themes. The U.S. Senate will vote as soon as Wednesday on a bipartisan spending bill to avoid a partial federal shutdown and keep the government funded until Feb. 8. Meanwhile, Treasury Secretary Steven Mnuchin said America and China are planning to hold meetings in January to negotiate a broader trade truce.

Elsewhere, the yield on benchmark Japanese notes slipped to within striking distance of 0 per cent before a rapid turnaround as the surge in demand triggered a margin call. Asian shares were mixed following a disappointing market debut for SoftBank Group’s Japanese telecom business. The Stoxx Europe 600 Index snapped a four-day losing streak. Italian debt surged after the European Commission decided against launching a disciplinary procedure over the country’s budget.

These are the main moves in markets:


The S&P 500 Index fell 1.5 per cent at the close of trade in New York. The Stoxx Europe 600 Index increased 0.3 per cent. The Nikkei-225 Stock Average fell 0.6 per cent to the lowest since March. The MSCI Emerging Market Index gained 0.2 per cent.


The Bloomberg Dollar Spot Index rose 0.1 per cent. The euro rose 0.1 per cent to US$1.1376. The Japanese yen fell 0.1 per cent to 112.6 per dollar. The British pound fell 0.1 per cent to US$1.2621.


The yield on 10-year Treasuries fell five basis points to 2.77 per cent. Germany’s 10-year yield was little changed at 0.24 per cent. Britain’s 10-year yield fell one basis point to 1.27 per cent. Italy’s 10-year yield plunged 17 basis points to 2.77 per cent.


West Texas Intermediate crude increased 2.1 per cent to US$47.20 a barrel. Gold fell 0.6 per cent to US$1,242.40 an ounce.