FX.co ★ US Stocks Erase Gains After Fed

US stock indices reversed lower after the Federal Reserve left interest rates unchanged but signaled the possibility of further hikes this year. The S&P 500 and Nasdaq 100 each fell 0.4%, while the Dow pulled back from its record high.

The Fed’s June Summary of Economic Projections showed that half of FOMC officials anticipate at least one additional rate increase in 2024. This more hawkish tilt came as core inflation gauges pointed to a renewed pickup in price pressures and labor market data remained firm, even in the face of economic disruptions stemming from the war in Iran. Notably, Chairman Warsh chose not to submit a dot in the projections, underscoring his intent to press for a change in the Fed’s monetary policy framework.

In geopolitics, Iran and the US remained on course to finalize their agreement by Friday.

Equity market losses were led by the “Magnificent Seven,” which sold off alongside a sharp decline in Treasuries. Meta, Microsoft, Alphabet, and Amazon each slid more than 2%. By contrast, semiconductor stocks extended their advance, with Micron, Marvell, Applied Materials, and Intel all gaining more than 3%.