The S&P 500 gave up its earlier gains on Wednesday, with major tech shares dropping, after the Federal Reserve indicated it will keep interest rates lower over the next few years.
The broader market index was down 0.1% in the final hour of trading. The Nasdaq Composite hit its session low, falling 0.8%. The Dow Jones Industrial Average was well off its high, trading just 106 points higher, or 0.4%.
Apple shares dropped more than 2.5%. Facebook slid 3.3%. Amazon and Netflix were down 1.4% and 2%, respectively. Alphabet slid about 1% and Microsoft dropped 1.4%. Gains in Goldman Sachs and JPMorgan Chase helped keep the Dow higher; the stocks were up 1.7% and 0.5%, respectively.
The U.S. central bank kept interest rates near zero. Members of the Fed’s policymaking committee also indicated the overnight rate could stay near zero through 2023. “With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time,” the Federal Open Market Committee said in a statement.
Fed Chairman Jerome Powell reiterated the central bank’s approach, telling reporters in a news conference: “We expect to maintain an accommodative stance of monetary policy until these outcomes, including maximum employment, are achieved.”
He also added: “With regard to interest rates, we now indicate that we expect it will be appropriate to maintain the current zero to 0.25% target range for the federal funds rates until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”
The chairman also said certain areas of the economy will continue to struggle without further fiscal aid. That comment came after White House chief of staff Mark Meadows said he was optimistic about Democrats and Republicans reaching a coronavirus stimulus deal. President Donald Trump also signaled in a tweet that he would back a bigger package.
Republicans and Democrats have struggled to reach a deal on further stimulus, dwindling hopes of an agreement being struck before the U.S. presidential election in November.
“They’re in this for the long game,” said Tom Hainlin, global investment strategist at Ascent Private Capital Management. “They’ve been looking at the unemployment data and they know what they can do, but they can’t supplement fiscal policy.”
In corporate news, one of the hottest initial public offerings of 2020 opened for trading on Wednesday. Data storage software company Snowflake surged more than 100% in its public-market debut. The IPO was priced at $120 per share.
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