At the close of trade, the Dow Jones Industrial Average index declined 153.07 points, or 0.46%, to 32,862.30. The S&P500 index fell 58.66 points, or 1.48%, to 3,915.46. The tech-heavy Nasdaq Composite Index lost 409.03 points, or 3.02%, to 13,116.17.
The US central bank showed an optimistic view about the outlook for the American economy, but Federal Reserve Chair Jerome Powell cautioned a full recovery remains far off. The US Federal Reserve continues to provide dovish guidance and is keeping its policy Fed fund rate close to 0% through 2023. It will maintain the pace of its pace of quantitative easing programme via its US$120bn monthly purchase of bonds, despite an economic growth outlook upgrade on its latest dot plot that projected US 2021 GDP growth to be at 6.5% (the strongest since 1983) from a prior projection of 4.2% in the December 2020 FOMC meeting. In addition, the US labour market is expected to improve, with the median estimate for unemployment to decline to 4.5% towards the end of 2021, dipping further to 3.5% in 2023. The Fed downplayed the risk of inflationary pressures, and only expect a bump in inflation to 2.4% in 2021 before slowing to 2% in 2022, excluding food and energy.
The bond yields hit 14-month highs after the Federal Reserve pledged to tolerate inflation and keep monetary policy loose through 2023. The yield on the benchmark 10-year notes crossed 1.75% on Thursday, for the first time since Janurary 2020.
ECONOMIC NEWS: US Jobless Claims Rise To 1-Month High In Mid-March- US first-time claims for unemployment benefits climbed to 770,000 in the week ended March 13th, an increase of 45,000 from the previous week's revised level of 725,000, according to a report released by the Labor Department on Thursday. The unexpected increase in jobless claims was partly due to jump in claims in Texas due to the impact of Winter Storm Uri. Meanwhile, the Labor Department said the less volatile four-week moving average dipped to 746,250, a decrease of 16,000 from the previous week's revised average of 762,250. The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also edged down by 18,000 to 4.124 million in the week ended March 6th.
Philly Fed Manufacturing Activity Spikes To Nearly 50-Year High In March- A reading on Philadelphia-area manufacturing activity spiked to a nearly 50-year high in the month of March, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday. The Philly Fed said its diffusion index for current activity soared to 51.8 in March from 23.1 in February, with a positive reading indicating growth in regional manufacturing activity. With the substantial increase, the Philly Fed Index skyrocketed to its highest level since hitting 53.6 in April of 1973. The surge by the headline index came as the new orders index also jumped to a nearly 50-year high, spiking to 50.9 in March from 23.4 in February. The shipments index also climbed to 30.2 in March from 21.5 in February, while the number of employees index rose to 30.1 from 25.3. On the inflation front, the prices paid index shot up 75.9 in March from 54.4 in February, reaching its highest level since March of 1980. The prices received index also jumped to 31.8 from 16.7. The Philly Fed also said the survey's future indexes indicate more optimism about continued growth over the next six months.
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