Stocks fell on Wednesday after the Federal Reserve raised its inflation expectations and moved up its timeline on when it will raise interest rates. All three major benchmarks closed in the red, with the Dow dropping more than 265 points and the S&P 500 being pulled lower by losses in Utilities
Here's how the market settled on Wednesday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Fed signals sooner-than-expected interest rate hikes:
The Federal Open Market Committee (FOMC) indicated that interest rate increases are coming faster than previously forecasted due to rising inflation levels as the U.S. economy continues to recover from the coronavirus pandemic. The policymaking FOMC stated that rate hikes could come as soon as 2023, which is a year earlier than its March 2021 forecast. The Fed also raised its headline inflation expectations to 3.4%, a full percentage point higher than its March projection.
However, the central bank does not plan to begin cutting back on its $120 billion monthly bond-buying program, with Chairman Jerome Powell stated that policymakers will warn Wall Street before the Fed moves to change the rate of its asset purchases.
"You can think of this meeting what we had as the 'talking about talking about; meeting," Powell said at a news conference on Wednesday. "In coming meetings, the committee will continue to assess the economy's progress towards our goals. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases."
Here's how the market stood in the afternoon:
S&P 500 Index: -0.24% to -10.40 points to 4,236.19
Dow Jones Industrial Average: -0.35% or -120.89 points to 34,178.44
Nasdaq Composite Index: -0.05% to -6.86 points to 14,064.92
Housing starts rise at a less-than-expected rate in May:
Housing starts rose at a slower-than-expected rate in May with tight inventory levels and rising prices further impacted housing market activity.
Housing starts rose 3.6% to a seasonally adjusted annualized rate of 1.572 million in May, the Commerce Department said Wednesday. This followed a 12.1% drop in April, which was downwardly revised from the 9.5% decrease previously reported.
Building permits, meanwhile, declined by 3% to a seasonally adjusted annualized rate of 1.681 million. This was a bigger decrease than the 0.2% expected, and followed a drop of 1.3% in April.
Here's how the market started trading after open:
S&P 500 Index: +0.02% or +0.75 points to 4,247.25
Dow Jones Industrial Average: -0.06% or -20.00 points to 34,268.00
Nasdaq Composite Index: +0.16% or +22.75 points to 14,053.00
