U.S. stocks retreat after Fed rate hike

U.S. stocks reversed early gains to trade lower around midday Thursday, as investors assessed the impacts of U.S. Federal Reserve's first rate hike in nearly a decade.

By noon, the Dow Jones Industrial Average fell 124.97 points, or 0.70 percent, to 17,624.12. The S&P 500 lost 17.68 points, or 0.85 percent, to 2,055.39. The Nasdaq Composite Index was down 32.13 points, or 0.63 percent, to 5,039.00.

After the conclusion of its two-day meeting, the U.S. central bank on Wednesday announced raising benchmark interest rate by 25 basis points, the first rate hike since 2006, marking the end of an era of extraordinary easing monetary policies.

According to the statement released after the meeting, in light of the current shortfall of inflation from the central bank's 2-percent target, the Fed projects that the development of economic conditions will warrant "only gradual" increase in the benchmark interest rate.

U.S. Fed Chair Janet Yellen said at a press conference that policies would remain accommodative and that the significance of the first hike should not be overblown.

U.S. stocks rallied for the third straight day on Wednesday following the Fed's announcement, as investors thought the decision to raise rates is a vote of confidence in the U.S. economy.

Analysts believed the stock markets would witness some volatility as Wall Street tries to digest the U.S. central bank's decision.

On the economic front, in the week ending Dec. 12, the advance figure for seasonally adjusted initial jobless claims was 271,000, a decrease of 11,000 from the previous week's unrevised level of 282,000, said the U.S. Labor Department on Thursday.

The four-week moving average was 270,500, little changed from the previous week's unrevised average of 270,750. Endit