Wall Street higher and Dow getting closer to the 200,000 level

Wall Street and stocks actually finished lower on Wednesday after the Fed hiked interest rates and traders sold the fact.

The Dow Jones Industrial Average was trading on the way to the psychological 20,000 target, but the question is whether higher rates are going to offset any benefits of tax breaks for the corporate sector. There was an initial spike int he indexes while the dollar ripped on a hawkish Fed, but due to the dot plot and the Fed forecasting three rate hikes in 2017, stocks turned lower.

The Dow Jones Industrial Average broke the seven-day winning streak and actually dropped 117 points, or 0.6%, to end at 19,793 while the S&P 500 slid 18 points, or 0.8%, to close at 2,253. The Nasdaq Composite Index fell 27 points, or 0.5%, to close at 5,436. US 10yr treasury yields initially extended yesterday’s post-FOMC rise by another 7bp to 2.64% - a two-year high, before steadying around 2.50%. US dollar index extends rally to fresh 13-year highs above 103.00

Fed outllook

The Federal reserve surprised markets with the dot plot and the hawkishness against a backdrop of dovish rhetoric throughout 2016 that has enabled stocks to keep climbing on cheap money. Analysts at Bank of Tokyo Mitsubishi explained, An upgrade to the Fed's economic outlook on the back of looser fiscal policy could be utilised to provide justification for the next rate hike. "After waiting a year to follow up the first rate hike, the next rate hike is likely to be delivered much sooner. It could even come as early as at the March meeting although we believe it is more likely to be delivered in Q2. The potential for another rate hike early next year should continue to support a stronger US dollar in the near-term."