Julius Shakari, of California in full PPE gear, takes photos with his friend in front of the Charging Bull, sometimes referred to as the Wall Street Bull, a bronze sculpture in Manhattan’s financial district in New York City on May 19, 2020.
Timothy A. Clary | AFP | Getty Images
US equity futures were flat Wednesday night as traders digested the Federal Reserve’s pledge to keep rates low for the next several years.
The Dow Jones Industrial Average was trading 6 points lower, or 0.02%. Futures on S&P 500 and Nasdaq 100 were also slightly lower.
Members of the Federal Open Market Committee have indicated that the overnight rate in the United States could remain pegged at the zero bound until 2023, as the central bank tries to boost inflation. In a statement, the committee said: “With inflation consistently below this longer term target, the Committee will aim to achieve inflation moderately above 2% for a period of time, so that inflation averages 2%. % over time.”
Fed Chairman Jerome Powell reiterated this position at a press conference, saying easy monetary policy will remain “until these results, including maximum employment, are achieved.”
He also said parts of the US economy will continue to struggle unless lawmakers act with further fiscal stimulus. This comment from Powell came as lawmakers struggle to reach agreement on a new coronavirus aid bill. Earlier Wednesday, White House chief of staff Mark Meadows said he was optimistic a deal could be reached.
Normally, the prospect of lower rates for an extended period of time encourages buying stocks. However, that was not the case on Wednesday.
The S&P 500 and Nasdaq both closed lower and the Dow finished well away from its session high. Big Tech led the S&P 500 and Nasdaq with Apple, Facebook and Microsoft all closing lower.
“The major indices have returned to their near-term trading ranges following the Fed’s announcements, confirming that the bulls are still not out of the woods,” said Ken Berman, founder of Gorilla Trades. “While there was nothing scary about today’s Fed announcements, stocks have reacted bearishly, especially in the tech sector.”
On Thursday, Wall Street will have the last look at weekly jobless claims in the United States. Data on housing starts in the United States is also expected to be released.
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