The S&P 500 and the Dow ended slightly higher on Wednesday after the Federal Reserve said it would start reducing its huge bond portfolio next month and signaled it expects another interest rate hike by year-end.
The Dow Jones Industrial Average added 42 points, or 0.19% to end at 22,413, its seventh straight record close. The S&P 500 gained two points, or 0.06%, to 2,508, clocking its sixth record closing high in the last seven sessions. The Nasdaq Composite fell five points, or 0.08%, to 6,456, with Apple Inc (AAPL.O) as its biggest drag.
The Fed left rates unchanged for now, as was widely anticipated, but investors’ expectations changed for December after the US central bank signaled one more rate hike by year-end despite recent weak inflation readings.
In line with expectations, the Fed said it would begin in October to cut its roughly $4.2 trillion in US Treasury bonds and mortgage-backed securities holdings by initially cutting up to $10 billion each month from the amount of maturing securities it reinvests.
Financial stocks jumped as banks benefit from higher rates. Utilities took a fall on concerns that the defensive sector would look less attractive as rates climb.
Zions Bancorporation climbed 1.6%, while Raymond James Financial rose 1.4%.
Technology companies were among the biggest decliners. Shares of Apple fell 1.7% after it admitted its latest smartwatch has connectivity problems. Qorvo slid 5.4%. Adobe Systems also slumped.
Traders also sold off several packaged food companies after General Mills' latest quarterly results fell short of Wall Street's expectations. The cereal maker slid 5.8%. Kellogg fell 1.7%, while Campbell Soup lost 1.7%.
In Asia, stock markets diverged on Thursday in morning session after the Fed announced that it would begin paring back its balance sheet in October.
Japan's Nikkei 225 rose 0.71%. Across the Korean Strait, the Kospi edged down 0.13%. Down Under, the S&P/ASX 200 lost 0.74%.
Greater China markets were mostly flat in early trade. The Hang Seng Index edged down 0.14%. The Shanghai Composite slid 0.08% and the Shenzhen Composite inched lower by 0.04%.