US stocks tumble as Fed minutes revive interest rate fears

FILE: Wall Street stocks tumbled into negative territory.

NEW YORK - Wall Street stocks tumbled into negative territory Wednesday after the minutes of the last Federal Reserve meeting revived worries about higher interest rates.

The Dow Jones Industrial Average lost 0.7 percent to close at 24,797.78.

The broad-based S&P 500 shed 0.6 percent to end the session at 2,701.33, while the tech-rich Nasdaq Composite Index dipped 0.2 percent to 7,218.23.

US stocks were in positive territory most of the session but began falling about 40 minutes after the Fed released the minutes of last month's policy meeting. The report showed central bankers believe the recent tax cuts could juice the economy more than expected in the near term, meaning further interest rate hikes likely will be needed.

The minutes kept the Fed on track to hike rates in March, which is "not new news, but confirmation" of expectations, said Art Hogan, chief market strategist at Wunderlich Securities.

Hogan said the weakness in equities coincided with a jump in the yield of the 10-year Treasury bond to a four-year high, reviving worries that higher rates could crimp growth and potentially prod more investors to exit equities in favour of bonds.

"I would expect volatility is going to be more the norm than the exception," Hogan said.

Walmart was again the biggest loser in the Dow, shedding another 2.8 percent following Tuesday's disappointing earnings report that led to the retail giant's worst day on Wall Street in more than 30 years. 

Several other leading retailers lost more than one percent, including Home Depot and Best Buy.

The Dow's biggest gainer was United Technologies, which advanced 2.2 percent after its Pratt & Whitney division said it found a solution to problems with an aircraft engine that has led to the grounding of some Airbus 320 planes. 

AFP

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