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The Fed left rates unchanged at the 5%-5.25% range on Wednesday, but indicated they could rise by at least half a percentage point this year as inflation remains stubbornly persistent and the U.S. economy stays resilient.
Traders see a 72% chance of a 25-basis-point rate hike in July, up from around 60% a day earlier, according to the CME Fedwatch tool.
“Powell expressed that the committee seemed surprised about the resilience of current inflation even if Tuesday’s CPI print showed a continued slowing in the headline inflation rate,” said Charles Hepworth, investment director at GAM Investments.
“Admitting to being surprised that the Fed’s policy to date hasn’t cooled a hot jobs market is basically signaling higher rates are indeed even more necessary and can be withstood by the economy as it glides (to) a soft landing.”
The S&P 500 and Nasdaq rose for a fifth consecutive session on Wednesday, while the Dow ended down following the Fed decision.
Market heavyweights Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Amazon.com (NASDAQ:AMZN) fell between 0.4% and 1.5% in premarket trading as government bond yields continued to rise. [US/]
Shares of Tesla (NASDAQ:TSLA) dipped 3.1%. The stock snapped a record 13-day streak of gains in the previous session.
At 7:23 a.m. ET, Dow e-minis were down 78 points, or 0.23%, S&P 500 e-minis were down 18.25 points, or 0.41%, and Nasdaq 100 e-minis were down 107 points, or 0.7%.
Investors awaited a slew of economic data later in the day, including the initial jobless claims for the week ended June 10 and retail sales for May due at 8:30 a.m. ET.
Kohls Corp added 1.7% after TD Cowen upgraded the department store operator to “outperform” from “market perform”.
U.S.-listed shares of Chinese companies such as Alibaba (NYSE:BABA) Group and JD (NASDAQ:JD).com rose almost 2% after the People’s Bank of China cut the borrowing cost for its medium-term policy loans for the first time in 10 months.
