NEW YORK (Reuters) – Global stocks slipped and the dollar strengthened on Wednesday after the Federal Reserve pledged to keep interest rates close to zero until at least 2023 and to maintain its program of ‘purchase of bonds in place to stimulate the US economy as part of an accommodative stance.
The S&P 500 and the Nasdaq ended a choppy bearish session as losses at big tech names such as Amazon.com and Apple weighed on the market and pushed down the MSCI-centric benchmark on the United States for the performance of stocks around the world.
Longer-term US Treasury yields and gold prices edged up after the Fed promised to hold rates on hold until inflation is on track to “moderately exceed” l The US central bank’s 2% inflation target “for a while”.
“They want to be accommodating. They want to be super dovish. The market price is dovish, ”said Nancy Davis, managing partner and chief investment officer at Quadratic Capital Management LLC in Greenwich, Connecticut.
“No one thinks there will be any inflation and the forecast is more accommodating and in line with what the market expected,” Davis said, adding that she believed there was a danger that inflation could exceed. expectations.
New economic projections released with the Fed’s policy statement showed rates were held until at least 2023, with inflation never exceeding 2% during that time. Policymakers have seen the economy shrink 3.7% this year, far less than the 6.5% drop expected in June. Unemployment, which registered 8.4% in August, was seen to fall to 7.6% by the end of the year.
Last month, the U.S. central bank adopted a new approach to inflation and unemployment that will allow the economy to run a little warmer than in the past to help ensure job growth for wage earners at low income.
Phil Orlando, chief equity strategist at Federated Investors in New York City, said short hedging or other hedging may have forced stocks down late in the day and the market could easily rebound by Friday.
“The market has this weird response mechanism around Fed meetings all the time, regardless of the chairman,” he said. “I watched the press conference, I watched the questions and answers; I thought what (Fed Chairman Jerome Powell) said was right.
MSCI’s benchmark for global equity markets fell 0.17% to 574.65, while its emerging markets index rose 0.38%.
On Wall Street, the S&P 500 lost 15.71 points, or 0.46%, to 3,385.49 and the Nasdaq Composite fell 139.86 points, or 1.25%, to 11,050.47. The Dow Jones Industrial Average closed 36.78 points higher, or 0.13%, at 28,032.38.
In Europe, the large FTSEurofirst 300 index closed 0.49% higher at 1,446.16. London’s FTSE 100 was held back by gains in other European indices, down 0.44% at the close, but the ailing pound was supported by a weaker dollar.
European retail inventories surged on strong results from Inditex, owner of Zara, after announcing a gradual return to normalcy, with online sales rising sharply and in-store sales recovering. Shares of the Spanish retailer jumped 8.1%.
Consumer spending in the United States slowed in August, as retail sales excluding autos, gasoline, building materials and food services fell 0.1% after a downward revised gain of 0 , 9% in July.
Retail sales lost some steam in August, but consumers are still doing well despite modest weakness compared to expectations, said Russell Price, chief economist at Ameriprise Financial in Troy, Michigan.
When the pandemic slowed economic growth, consumers were in a relatively strong financial position, the opposite of what is normally the case in an economic downturn, he said.
“Consumers are still doing well overall despite the modest weakness compared to expectations,” Price said.
The yen rose overnight and extended its gains which reached an almost seven-week high of 104.995 per dollar as investors sought safer assets.
The dollar index rose 0.052%, with the euro down 0.36% to $ 1.1802.
The Japanese yen strengthened 0.41% against the greenback to 104.97 per dollar.
The 10-year US Treasury note rose 1.8 basis points to 0.6969% after trading lower for much of the session.
US gold futures stabilized 0.2% at $ 1,970.50 an ounce. Spot gold prices rose 0.10% to $ 1,957.47 an ounce.
Oil prices rose for a second day, up more than 2%, as Hurricane Sally shut down offshore production in the United States and an industry report showed crude inventories American had unexpectedly declined.
Brent futures rose $ 1.69 to $ 42.22 a barrel, while U.S. crude futures stabilized at $ 1.88 to $ 40.16 a barrel. barrel.
Zinc prices have pushed to 16-month highs reached earlier this month as a rebound in Chinese industry bolstered demand prospects and the yuan strengthened, making metals more affordable for consumers. Chinese buyers.
For a chart on global equities:
Reporting by Herbert Lash; Edited by Catherine Evans, Jonathan Oatis and Paul Simao