New York – Stocks fell slightly Tuesday after the Federal Reserve raised interest rates as expected, exacerbating traders’ ill humor following a disappointing profit forecast from Dell Inc.
The Fed’s quarter-percentage-point hike in the nation’s benchmark federal funds rate, pushing it to 4 percent, was widely anticipated. The Fed also signaled that it would continue gradually raising rates but noted that inflation has had relatively little effect on the economy in recent months.
Stocks may be falling because of sentiment on Wall Street that the increases are unwarranted.
This increase and the one or two expected to follow simply may serve to give Ben Bernanke, who has been nominated as the next Fed chairman, wiggle room to cut rates as a stimulus next year, said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati.
The most recent sign of a slowing economy came from PC-maker Dell, which trimmed its sales and income targets for the current quarter after the close of regular trading Monday, saying sales in the U.S. and Britain were weak.
The company also said it would take a third-quarter charge of $450 million to restructure its consumer unit and replace some faulty PC circuits.
The Dow Jones industrial average fell 33.30, or 0.32 percent, to 10,406.77.
Broader stock indicators also dropped. The Standard & Poor’s 500 index fell 4.25, or 0.35 percent, to 1,202.76, while the Nasdaq composite index was dragged down by Dell, slipping 6.25, or 0.29 percent, to 2,114.05.
The Bloomberg Colorado Index, a price- weighted list of companies based in the state, rose 0.89 to 302.64.
Bonds were lower, with the yield on the 10-year Treasury note rising to 4.58 percent from 4.55 percent late Monday. The U.S. dollar was mixed against other major currencies in European trading. Gold prices were lower.
A barrel of light crude oil was quoted at $59.85, up 9 cents, in trading on the New York Mercantile Exchange.
