U.S. stock gains evaporate after Fed raises interest rates

NEW YORK -- U.S. stocks have rapidly surrendered an early surge and are wavering between small gains and losses Wednesday afternoon as investors react to the Federal Reserve's latest interest rate plans.

Stocks were significantly higher before the Fed raised interest rates. Internet, technology and consumer-focused companies are down while a partial recovery in oil prices is pulling energy companies higher following huge losses a day earlier.

The Dow Jones Industrial Average is little changed. Immediately before the Fed's announcement at 2 p.m., it was up 381 points.

Bond prices rose after the Fed's announcement, sending yields lower.

KEEPING SCORE: The S&P 500 index added 6 points, or 0.2 per cent, to 2,552 as of 2:20 p.m. Eastern time. It's down 8 per cent in December. The Dow added 81 points to 23,756. The Nasdaq composite shed 17 points, or 0.3 per cent, to 6,766. The Russell 2000 index, made up of smaller-company stocks, dipped 1 point, or 0.1 per cent, to 1,375.

FED FOCUS: As expected, the Fed raised its key interest rate for the fourth time this year while suggesting it will go slower in raising rates next year. The quarter-point hike, to a range of 2.25 per cent to 2.5 per cent, lifts the Fed's benchmark rate to its highest point since 2008. The increase will mean higher borrowing costs for many consumers and businesses.

The Fed is now forecasting two increases in rates in 2019 instead of three. The central bank now expects the long-term level of its main interest rate will be 2.8 per cent, down from 3 per cent.

Bond prices rose following the Fed's announcement, sending yields lower. Bond yields are benchmarks for long-term interest rates on loans such as mortgages. The yield on the 10-year Treasury note fell to 2.79 per cent from 2.84 per cent immediately before the Fed's announcement.

FROWNY FACE: Facebook fell after the New York Times reported that the social media network gave companies more access to users' personal data than it has previously said. The report said Facebook had arrangements with more than 150 companies including Microsoft, Amazon, Spotify and Netflix that let different companies read, write and delete users' private messages, see the names of a user's friends or their news feeds without their consent.

Separately, the District of Columbia sued Facebook for allowing Cambridge Analytica, a data-mining firm working for the Trump campaign, to improperly access data from as many as 87 million Facebook users.

Facebook lost 5.9 per cent to $135.23. It's down 38 per cent since late July on concerns about a slowdown in user growth, multiple privacy and safety scandals, as well as the possibility of increased regulation in the future.

LOST IN THE MAIL: FedEx said international shipping, especially in Europe, fell in its latest quarter, while the U.S.-China trade dispute is also affecting its business. The shipping company posted a smaller profit than analysts expected and said it will cut spending and offer buyouts to some workers to help make up for the shaky results.

"The peak for global economic growth now appears to be behind us," Chief Marketing Officer Rajesh Subramanian said in a conference call with investors.

FedEx stock lost 9 per cent to $168.38, and it has dropped 32.5 per cent this year.

ENERGY: Oil prices turned higher after plunging on worries about rising supplies and weakening global growth, which could weigh on demand. Benchmark U.S. crude climbed 2.1 per cent to $47.20 a barrel in New York. It dropped 7 per cent Tuesday and closed at a 16-month low, and has fallen almost 40 per cent since Oct. 3. Brent crude, used to price international oils, was up 0.5 per cent to $56.55 a barrel in London.

Wednesday's recovery helped energy company stocks, which are trading at their lowest levels since early 2016.

MEDICINE CABINET MERGER: Drugmakers GlaxoSmithKline and Pfizer said they will combine their consumer product businesses, bringing Pfizer's Advil pain medicine and Centrum supplements together with Glaxo's Sensodyne toothpaste. GlaxoSmithKline of Britain will own two-thirds of the combined company. Its stock gained 1.9 per cent to $37.82 while Pfizer edged up 0.5 per cent to $42.63.

METALS: Gold rose 0.2 per cent to $1,256.40 an ounce. Silver added 0.8 per cent to $14.82 an ounce. Copper climbed 1.9 per cent to $2.72 a pound.

EUROPE: European stocks rose after Italy's government reached an agreement with the European Commission on its budget plans. That avoids a legal dispute over the government's plan to ramp up spending. The Italian FTSE MIB jumped 1.6 per cent. Britain's FTSE 100 rose 1 per cent while Germany's DAX added 0.2 per cent and the CAC 40 in France rose 0.5 per cent.

ASIA: Japan's Nikkei 225 index fell 0.6 per cent and while South Korea's Kospi rose 0.8 per cent. Hong Kong's Hang Seng was 0.2 per cent higher.

CURRENCIES: The dollar slipped to 112.41 yen from 112.53 yen. The euro rose to $1.1385 from $1.1357 and the British pound dipped to $1.2626 from $1.2639.