US stocks dip as Fed inches closer to policy shift

NEW YORK (AFP) – Wall Street stocks declined on Wednesday (June 16) as the Federal Reserve edged a bit closer to tightening monetary policy while adopting a broadly dovish response to recent signs of inflation.

Shares hit session lows shortly after the US central bank raised its inflation and growth forecast and released projections that showed a majority of Fed officials expect interest rate hikes in 2023.

However, equities recovered somewhat during Fed chairman Jerome Powell’s press conference during which he emphasised that he views recent price hikes as temporary, and that steps to restrict monetary supply are not imminent.

Jason Schenker of Prestige Economics said the overall message was “highly accommodative,” but included “some hawkish changes at the margin.”

The Dow Jones Industrial Average finished at 34,033.67, down 0.8 per cent.

The broad-based S&P 500 ended down 0.5 per cent at 4,223.70, while the tech-rich Nasdaq Composite Index lost 0.2 per cent at 14,039.68.

Large banks mostly rose, with JPMorgan Chase up 0.7 per cent and Bank of America gaining 0.6 per cent as long-term bond yields climbed following the Fed announcement.

Among individual companies, General Motors jumped 1.6 per cent as it again lifted its investment plan for electric and autonomous vehicle technology. The auto giant now expects to spend US$35 billion through 2025, up 30 per cent from its prior plan.

Oracle slumped 5.6 per cent despite reporting better-than-expected results. Analysts expressed disappointment with the software giant’s forecast.

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