The S&P 500 was flat on Thursday, a day after the Federal Reserve’s rate outlook sparked a sell-off.
The S&P 500 fell 0.1% and the Nasdaq Composite gained 0.3%. The Dow Jones Industrial Average dropped about 100 points, weighed down by biggest losers Dow Inc. and Caterpillar as most commodity prices took a hit for a second day.
The closely-watched Federal Reserve meeting Wednesday spurred a sell-off in equities after the central bank moved up its timeline for rate hikes, seeing two increases in 2023. The Fed also hiked its inflation forecast to 3.4% for the year, a percentage point higher than the FOMC’s forecast in March.
Materials stocks were weaker Thursday as higher rates may further take the air out of a big commodities rally in 2021. China is also cracking down on the commodities surge to ease inflation fears. Freeport-McMoRan led materials stocks lower, down about 2%. Copper futures were off by 2%.
Hedge fund legend David Tepper told CNBC’s Scott Wapner that the Fed did a good job on Wednesday and that “the stock market is still fine for now.” The S&P 500 is less than 0.8% from an all-time high.
Some key technology stocks were higher on Thursday with Tesla, Shopify and Twilio all up about 1%.
On Wednesday, the Dow lost about 265 points and the S&P 500 edged 0.5% lower. The Nasdaq Composite dipped 0.2%.
Markets rallied off their intraday lows Wednesday after Fed Chair Jerome Powell said projections for future rate increases should be “taken with a big grain of salt” and reiterated that he believes that inflation is transitory. Powell also did not issue guidance on when the central bank will begin tapering its bond-buying program.
“You can think of this meeting that we had as the ‘talking about talking about’ meeting, if you’d like,” Powell said when asked about tapering. “I now suggest that we retire that term, which has served its purpose.”
The Fed chair said the central bank will continue to monitor the economic recovery and will provide “advance notice” before announcing any updates regarding tapering.
The Labor Department reported that initial jobless claims rose last week to 412,000, up from the previous week’s 375,000. Economists polled by Dow Jones expected jobless claims of 360,000.
Lennar popped 3.5% after reporting better-than-expected earnings.
