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Stock futures opened lower Wednesday evening as investors pondered the Federal Reserve’s latest monetary policy decision and updated forecast, indicating a faster path for higher interest rates than previously expected. Contracts on the S&P 500, Dow and Nasdaq added to earlier losses.
Each of the three major stock indexes ended Wednesday’s session lower after the Federal Reserve’s new forecast indicated two interest rate hikes by the end of the year 2023. Members of the Federal Open Market Committee also raised their forecasts for economic growth and inflation, confirming market participants’ concerns about a rally. sustainable. the prices. While the Fed left interest rates unchanged at the conclusion of this month’s meeting and kept the pace of asset purchases unchanged, market participants are now preparing for a potentially less favorable bias in Fed policy.
“There was a more hawkish tone from the Fed, and most of it came from the committee but [Fed Chair Jerome] Powell also offered an optimistic assessment of the economy taking small steps toward exit,” Michelle Meyer, an economist at Bank of America in the US, said in a note on Wednesday. The big surprise came from the points where the median forecast was now two points away in 2023 with only two points away from 2022 also showing a rise.”
“While Fed officials speak of “temporary” inflation, some clearly believe there is greater consolidation, which is reflected in the upside risks to PCE [personal consumption expenditures outlook] in September [summary of economic projections],” she added.
On the other hand, the Fed also acknowledged that the workforce may be under pressure for some time, given the great difficulties the economy has faced in regaining all the jobs lost during the pandemic even with more reopenings. Powell said during his press conference on Wednesday that the economy is ultimately “far” from making “more significant progress” toward the Fed’s target of maximum employment that would signal the beginning of a downturn.
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But a lot of the employment data was headed in the right direction, albeit with some moderation in the rate of improvements, and some continuing concerns about a labor shortage. The weekly jobless claims report released by the Labor Department on Thursday morning is expected to show a seventh straight drop in initial jobless claims to a new pandemic-era low.
“Even with the tapering in asset purchases, and the subsequent moderate increase in interest rates, we think it is clear that the economic backdrop will lead to a significant improvement in employment,” said Rick Rieder, chief investment officer for global fixed income at BlackRock. E-mail.
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6:01 p.m. ET Wednesday: Stock futures fall, extending previous lows
Here’s where the markets are trading on Wednesday night:
S&P 500 futures contract (ES=F): 4213.75, -9.25 points (-0.22%)
Dow Jones futures (YM=F): 33951.00, -66 points (-0.19%)
Nasdaq Futures (NQ=F): 13,947.25, -34 points (-0.24%)
NEW YORK, NY – JUNE 02: An outside view of the New York Stock Exchange and Wall Street as the new Organon company begins trading next Thursday in New York on June 02, 2021. Organon is looking to expand to provide treatments for other conditions specific to women, about 80% of the new company’s revenue will come from outside United States (Photo by Kena Betancur / VIEWpress)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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