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U.S. stocks slip after Fed holds rates steady, dollar eases
Three of the 12 Fed members voted for a quarter point hike, while crude prices rose about 7% amid renewed Middle East strikes.
U.S. stocks stayed lower on Wednesday after the Federal Reserve left its benchmark interest rate unchanged, a decision economists largely expected. Interest rate sensitive 2-year Treasury yields reversed an earlier increase, while the U.S. dollar slipped following the Fed move.
The Fed kept the target range at 3.50% to 3.75%, and three of the 12 members of the Federal Open Market Committee preferred a quarter percentage point hike. The outcome came even as recent expectations for a rate increase were supported by a rise in oil prices tied to renewed fighting in the war on Iran, while June inflation data moderated more than economists had forecast.
Market performance showed broad weakness, with the Dow Jones Industrial Average down 1.55% to 51,928.87, the S&P 500 down 0.50% to 7,391.31, and the Nasdaq Composite down 0.37% to 24,784.10. The 2-year yield was flat at 4.277%, the 10-year note yield rose 3.67 basis points to 4.641%, and the dollar index fell 0.25% to 101.17.
Oil prices were up around 7% after major airstrikes resumed in the Middle East, dashing hopes for an imminent end to the Iran war, and the rally was reinforced by data showing a drop in U.S. crude inventories. Investors also looked ahead to a wave of key earnings, with Microsoft and Meta due to report after the market close, followed later this week by Amazon.com and Apple.
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