Stocks mixed following rate hike, economic data

U.S. stocks were mixed on Thursday, following the latest batch of economic data and the Fed’s decision to hike interest rates.

The Dow Jones Industrial Average fell 25.89 points to 25,175.31. The S&P 500 rose 6.86 points to 2,782.49. The Nasdaq Composite gained 65.34 points to 7,761.04, hitting a new record high.

On Wednesday, the U.S. Federal Reserve moved, as expected, to increase interest rates by 25 basis points.

While the hike was anticipated, the Fed is now looking for a total of four rate hikes in 2018 instead of three. Including Wednesday's hike, the Fed has increased short-term rates two times in 2018.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 39853.87 -504.22 -1.25%
SP500 S&P 500 5427.13 -128.61 -2.31%
I:COMP NASDAQ COMPOSITE INDEX 17342.413349 -654.94 -3.64%

“Not surprised at all that the Fed raised rates, was a little surprised that they hinted further toward a 4th hike by year end,” said John Petrides, of Point View Wealth Management. “I thought they would have pushed that decision later in the summer as we had more data presented.”

Financial stocks fell, with regional and money center bank stocks the biggest laggards as the yield curve narrowed. The spread between the 10-year and two-year Treasury notes shrank to the lowest in almost 11 years Thursday morning, dropping below 38 basis points for the first time since August 2007.

A narrowing yield curve squeezes profits for banks and lenders by reducing the difference in the rates they earn and what they pay on deposits. The Federal Reserve’s decision on Wednesday to increase interest rates while raising their forecast for four, not three, rate hikes this year was the catalyst behind the narrowing yield curve.

Ticker Security Last Change Change %
GS THE GOLDMAN SACHS GROUP INC. 486.70 -5.45 -1.11%
JPM JPMORGAN CHASE & CO. 208.59 -1.74 -0.83%
WFC WELLS FARGO & CO. 59.44 -0.23 -0.39%
BAC BANK OF AMERICA CORP. 42.19 -0.23 -0.53%

On Thursday, the European Central Bank (ECB) moved as expected to maintain interest rates. The central bank said it expects to end its bond-buying program in December.

Stateside, there was a barrage of economic data released on Thursday, including U.S. retail sales, which increased by 0.8% in May; import prices, which jumped 0.6% in May; and weekly jobless  claims, which dropped by 4,000 to 218,000 while the four-week average of claims fell by 1,250 to 224,250.

In the aftermath of the ECB's rate decision, the Dollar Index, which tracks the greenback against a basket of six currencies surged more than 1% and was on track for its biggest one-day gain in a year and a half.

FOX Business’ Charles Brady contributed to this article.