US stock market: S&P 500, Dow close lower after Fed holds rates steady, warns of higher for longer
economictimes.indiatimes.com
All three major U.S. stock indexes retreated in the wake of announcement, with interest rate sensitive megacap stocks Microsoft Corp, Apple Inc and Nvidia Corp pulling the Nasdaq down most.
The Fed's announcement was accompanied by its Summary Economic Projections (SEP) and dot plot, which sees an additional 25 basis point rate hike this year, peaking in the 5.50%-5.75% range.
The SEP projections also called for 50 basis points of rate cuts next year.
«It's your standard Fed day volatility,» said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.
«Yet it wasn't really a curve-ball event, because markets took things in stride.»
«This day has had a bull's eye on it all month and now we can move past it,» Detrick added.
The updated projections see the Fed funds target rate edging down to 5.1% by the end of next year, and to 3.9% by the end of 2025.
Since the Fed began tightening in March, core inflation has cooled. But its slow descent toward the central bank's 2% target has been slow and uneven.
The SEP forecasts inflation to drop to 3.3% by year-end, and to approach the central bank's average annual 2% target.
At the subsequent press conference, Fed Chairman Jerome Powell tempered rosier economic projections with a warning that inflation has a long way to go before reaching that target.
«The Fed didn't really rock the boat,» Detrick said.
