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US close: Markets mostly lower as Fed holds steady on interest rates

By Josh White

Date: Thursday 21 Mar 2019

US close: Markets mostly lower as Fed holds steady on interest rates

(Sharecast News) - Wall Street's main market gauges were in a mixed state - albeit mostly lower - at the close on Wednesday, after the Federal Reserve took the prospect of another rate hike off the table for 2019.
The Dow Jones Industrial Average was down 0.55% at 24,745.67 and the S&P 500 lost 0.29% to 2,824.23, while the Nasdaq Composite managed gains of 0.07% to end the day at 7,728.97.

As expected, the Federal Reserve stood pat on interest rates, holding steady on its target of between 2.25% and 2.5% after its two-day meeting for March.

The central bank also made it clear that no further increases in its interest rate targets would be delivered this year, given inflation was waning and economic growth was slowing.

Its dot plot continued to show that it would end its balance sheet runoff by September, while the Fed also slashed its gross domestic product estimate for the year to 2.1%.

The bank's members also agreed to take the shears to the Fed's personal consumption expenditure (PCE) inflation forecast, dropping it to 1.8% from a previous 1.9%, while its core PCE estimate remained at 2%.

In the after-meeting press conference, Fed chair Jerome Powell said there was "no need to rush to judgment" when it came to its more cautious stance, with the Fed's policy on its balance sheet set to ensure a "smooth [and] predictable" end to its runoff.

"We should expect the Fed to reiterate its patient approach to raising rates," noted Neil Wilson, chief market analyst at Markets.com, earlier.

"The problem for markets is that the dovishness is largely expected so the bar for a 'dovish surprise' from Powell is rather high.

"All the focus will be on the fresh set of projection materials and it's this that will matter for markets."

Wilson said markets should expect a shift down in the dots to underscore the more dovish stance.

He said the last dot plot in December was a lot more hawkish than the current market expectations suggested, adding it would seem likely that the Fed would fall into line with the market.

In corporate news, FedEx shares were down 2.5% after the company cut its profit forecast for this year for the second time in three months late on Tuesday and posted weaker-than-expected third-quarter results.

Pfizer was also in focus, slipping 0.31% after the pharmaceutical group said it bought a 15% stake in Vivet Therapeutics and now had an exclusive option to fully buy the privately-held French gene therapy company.

Google parent Alphabet rose 2.1%, after the EU slapped the search giant with a €1.5n fine for blocking rival online search advertisers.

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