Wall Street closed lower on Wednesday after the Federal Reserve held rates steady and policymakers projected the possibility of further rate hikes. The Nasdaq Composite, the S&P 500 and the Dow ended in negative territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1%, or 507.12 points, to close at 51,492.55. Sixteen components of the 30-stock index ended in negative territory, and 14 ended in the positive.
The tech-heavy Nasdaq Composite declined 1.3% or 354.69 points, to close at 26,021.66.
The S&P 500 lost 1.2% to end at 7,420.10. All 11 broad sectors of the broad-market index ended in negative territory. The Communication Services Select Sector SPDR (XLC), Consumer Discretionary Select Sector SPDR (XLY) and the Real Estate Select Sector SPDR (XLRE) fell 3%, 2.7% and 2.5%, respectively.
The major loser of the S&P 500 Index was Carvana Co. CVNA after its shares plunged 10.3%. Carvana currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The fear gauge, the CBOE Volatility Index (VIX), increased by 12.4% to 18.44. A total of 23.66 billion shares were traded on Wednesday, higher than the last 20-session average of 21.07 billion. The S&P 500 posted 27 new 52-week highs and 18 new lows, and the Nasdaq Composite recorded 86 new highs and 117 new lows.
Fed Keeps Rates Unchanged
The Federal Reserve, led by new Chairman Kevin Warsh, kept interest rates unchanged at 3.50-3.75% in his first meeting. According to reuters, the new projections for 2026 from the Fed officials were released, showing that nine of the 19 officials projected at least one increase in interest rates for the end of 2026.
Warsh dropped the Fed’s “forward guidance” and said that going forward, decisions at the Fed will be on a “data-dependent basis” rather than along a predetermined policy path.
The inflation rate is well above the Fed’s 2% goal, but the central bank sees much of this above-target reading as a result of supply issues. Its own forecast for inflation sees 3.6% in 2026, falling to 2.3% in 2027. Kevin Warsh also announced a comprehensive review of the Fed’s communications, its balance sheet and monetary policy framework.
Economic Data
The Department of Commerce reported that retail sales increased 0.9% in May, above the Zacks Consensus Estimate of 0.4%. The metric for April was revised downward to 0.4% from 0.5% reported earlier. Year over year, retail sales increased 6.9% in May. Core retail sales (excluding auto) increased 0.8% in May, above the Zacks Consensus Estimate of 0.4%. The metric for April was 0.7%.
For the week ended June 12, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 8.3 million barrels from the previous week.
The National Association of REALTORS reported that pending home sales increased 3.8% in May, in contrast to the Zacks Consensus Estimate of an increase of 1%. The metric for April was revised downward to 0.3% from 1.4% reported earlier. Year over year, pending home sales rose 4.8% in May.
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