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U.S. stocks erase gains after Fed's policy decision

After spending most of the day trading in the green, U.S. stocks slipped into the red after the Federal Reserve confirmed it would continue to embark on tighter monetary policy.

The S&P 500 (^GSPC) fell 0.33%, or 9.59 points, while the Dow (^DJI) slipped 0.4%, or 106.93 points at market close on Wednesday. The Nasdaq (^IXIC) fell 0.21%, or 17.1 points.

The Fed announced a 25 basis point increase in the target range for its benchmark interest rate to between to 2% and 2.25%, its highest level in about a decade. All nine voting members of the FOMC voted in favor of the decision. The Fed’s median forecast also predicts 2018 economic growth to hit 3.1%, up from the 2.8% projection it had seen in June.

ECONOMY: Fed signals more rate hikes are coming

Federal Reserve officials reaffirmed the likelihood of further rate hikes into 2019, with 12 of 16 officials forecasting another increase in rates before the end of this year.

“The tightening cycle is a reflection of the strength of the economy,” Fed Chairman Jerome Powell said during a press conference Wednesday afternoon following the release of the FOMC’s latest statement.

The Fed’s latest statement removed longstanding language of maintaining an “accommodative” monetary policy, suggesting Fed officials see their current interest rate policy as nearing the level needed to sustain full employment while meeting the Fed’s inflation target of 2%. But the language omission doesn’t indicate a change in the likely path of policy, Powell said during the press conference. “We still expect, as our statement says, further gradual increases in the target range for the Fed funds rate,” he said.

When pressed on matters of trade, Powell said he hasn’t yet seen measurable effects from U.S. tariffs on foreign goods on the U.S. economy. “If you look at the aggregate performance…it’s hard to see much happening at this point,” Powell said, but added that a more protectionist world “is going to be bad for the United States economy.”

U.S. Federal Reserve Chairman Jerome Powell holds a news conference following a two-day Federal Open Market Committee (FOMC) policy meeting in Washington, U.S., September 26, 2018. REUTERS/Al Drago

Sales of new single-family U.S. homes rose 3.5% in August to a seasonally adjusted annual rate of 629,000, the Commerce Department said in a statement Wednesday, buoyed by surges in purchases of new homes in the Northeast and West. The results narrowly missed expectations of 630,000, according to data compiled by Bloomberg, and July’s rate was downwardly revised to 608,000.

“The economy is strong. Labor markets are solid,” IHS Markit’s Patrick Newport said. “Yet, new home sales and single-family housing starts and permits have stalled. How can this be? Part of it is affordability. The 30-year mortgage rate has climbed about 65 basis points this year and is currently at levels last seen in May 2011; home prices as measured by the Federal Finance Housing Agency (FHFA) were higher in all 50 states in the second quarter from a year earlier; lumber prices in the summer were at an all-time high; and the tariffs on steel, aluminum and Canadian Softwood Lumber have raised the costs of building. This has choked off demand. On the supply side, rising construction costs, a lack of buildable lots, and a shortage of skilled labor have reduced incentives to build new homes.”

NEWS: Fox to sell Sky shares to Comcast, big tech heads to D.C.

Fox (FOX) will sell its 39% stake in Sky (SKY.L) to Comcast (CMCSA), just days after Comcast won an auction to purchase the European media company with a $40 billion bid. Disney (DIS), which will soon be the parent company to Fox, consented to the deal, according to a statement. Fox’s Sky stake is valued at more than $15 billion.

Major tech companies discussed data privacy in testimony Wednesday before the Senate Commerce Committee. Participants included AT&T (T), Amazon (AMZN), Google (GOOG, GOOGL), Twitter (TWTR), Apple (AAPL) and Charter (CHTR). Company representatives largely said they would support federal privacy regulation that would preempt state legislation, while emphasizing that any new measures should actually focus on boosting consumer privacy while minimizing unnecessary additional requirements for companies. Consumer privacy has been a major debate between the tech community and lawmakers this year, with California passing a stringent privacy bill over the summer following Europe’s roll-out of the General Data Protection Regulation.

Google will end its broad ban on cryptocurrency-related advertising, allowing regulated crypto exchanges to purchase ads in the U.S. and Japan starting in October. The original restrictions had been put in place in March and took effect in June in an attempt to ensure users wouldn’t get pulled into scams or frauds that have sometimes come up in the crypto space. Google’s latest action follows a similar move from Facebook (FB), which in June announced it was loosening a ban it had imposed in January on advertisements promoting cryptocurrencies.

Amazon made its first foray into homebuilding by way of the Alexa Fund, which invested $6.7 million in the Southern California startup Plant Prefab. The Southern California company creates single- and multifamily homes using sustainable construction materials. The investment marks a divergence from the Alexa Fund’s typical portfolio, which tends to include backing for startups that focus on voice technology.

STOCKS: SurveyMonkey makes it debut

SurveyMonkey began trading on the Nasdaq under the symbol “SVMK.” The polling software company priced its initial public offering of 15 million shares of common stock at $12.00 per share, raising $180 million. JP Morgan Chase, Allen & Co., BofA Merrill Lynch, Credit Suisse, UBS and Wells Fargo Securities were lead managers of the deal.

Shares of athletic apparel-maker Nike (NKE) fell 1.29% to $83.70 at the close Wednesday in New York after the company reported first quarter 2019 earnings Tuesday. The results — representing the quarter ending just prior to the release of the ad campaign featuring controversial quarterback Colin Kaepernick — beat average analysts’ expectations on revenue and adjusted earnings per share. Shares tumbled after hours as the company missed narrowly on gross margins and reported mixed sales results in overseas markets.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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