The Fed meeting overshadowed a dismal report from the Organization for Economic Cooperation and Development that said the coronavirus pandemic triggered the worst global recession in nearly a century. The organization said it expected global economic output to slump by 6% this year and take a bigger hit if there's a second wave of COVID-19 infections.
At closing bell, the Dow Jones Industrial Average dropped 282.31 points, or 1.03%, to 26,989.99. The S&P 500 index fell 17.04 points, or 0.53%, to 3,190.14. The tech-heavy Nasdaq Composite Index gained 66.59 points, or 0.67%, to 10,020.35, a new all-time closing record.
ECONOMIC NEWS: US Consumer Prices Edge Down In May-- US consumer price index edged down by 0.1% in May after slumping by 0.8% in April, the Labor Department released a report on Wednesday. The dip in consumer prices came amid a continued decrease in energy prices, which tumbled by 1.8% in May after plunging by 10.1% in the previous month. Prices for gasoline and fuel oil showed notable declines. Meanwhile, the report said food prices increased by 0.7% in May following a 1.5% jump in April. The continued growth was driven by higher prices for meats, poultry, fish, and eggs, with the beef index showing its largest ever monthly increase. Excluding food and energy prices, core consumer prices also slipped by 0.1% in May after falling by 0.4% in April. Core prices were also expected to come in unchanged.
Interest Rates Likely To Remain Near Zero Levels Through 2022, Says Fed-- US Federal Reserve on Wednesday announced its widely expected decision to maintain the target range for the federal funds rate at zero to 0.25%. The accompanying statement also reiterated that the Fed expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. While the Federal Reserve expects the U.S. economy to rebound in 2021 following a sharp contraction this year due to the coronavirus pandemic, the central bank has indicated interest rates are likely to remain at current near-zero levels through 2022.
The economic projections provided along with the statement showed most Fed officials expect rates to remain at current levels through 2022, with only a couple predicting an increase in rates. In his post-meeting press conference, Fed Chair Jerome Powell said the central bank is "not even thinking about thinking about raising rates." Expectations that rates will remain at record lows come as the Fed projects real GDP to nosedive by 6.5% in 2020, as the ongoing public health crisis weighs heavily on economic activity. However, the Fed's projections call for real GDP to rebound by 5.0% in 2021 followed by a 3.5% jump in 2022.
Regarding the Fed's asset purchase program, the central bank said it plans to increase its bond holdings at least at the current pace over the coming months but noted it remains prepared to adjust its plans as appropriate. The Fed's statement was little changed from April but did acknowledge financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
COMMODITY NEWS: Crude oil prices declined ahead of weekly data showing the size of US stockpiles from the Department of Energy. West Texas Intermediate crude fell as much as 3.1%, to $37.73 per barrel. Brent crude, the international benchmark, slipped 2.5%, to $40.14 per barrel, at intraday lows.
Among Indian ADR, HDFC Bank fell 0.55% to $43.63, WNS Holdings declined 1.85% to $53.52, Tata Motors shed 1.5% to $7.21, INFOSYS slipped 0.32% to $9.30, Wipro sank 1.2% to $3.28, and Dr Reddys Labs shed 0.4% to $54.43. ICICI Bank rose 1.52% to $9.37 and Vedanta rose 0.36% to $5.54.
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