The Dow Jones Industrial Average fell on Wednesday as investors awaited an update from the Federal Reserve on the state of the economy and status of any further stimulus from the central bank.
The 30-stock Dow dropped 250 points, or 0.9%, as Boeing shares slid more than 7%.The S&P 500 dipped 0.4%. The Nasdaq Composite hit a fresh record high, rising more than 0.5%, as gains in major tech stocks limited the broader market’s decline.
Shares of Amazon and Apple gained more than 1% each. Facebook Alphabet and Netflix rose 0.7%, 0.6% and 1.1%, respectively.
The Fed is expected to keep policy unchanged, but investors will be watching for thoughts on possibly implementing yield caps and strengthening forward guidance on how long the Fed will keep current policies in place. The Fed will be revealing its first forecast for the economy and interest rates since late last year, as it skipped a forecast in March just as the pandemic forced the abrupt shutdown of the economy.
“I don’t think the Fed is going to back off at all here,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “This is a longer-term endeavor. We think rates are going to be hon hold here for a long period of time. And, when you look at some of their programs, they’re just getting these lending facilities up and running.”
The central bank’s announcement is set for release at 2 p.m. ET. Fed Chairman Jerome Powell is scheduled to answer questions at 2:30 p.m.
The Dow and S&P 500 were under pressure on Tuesday as stocks benefiting from the economic reopening fell broadly. The Dow fell 300 points or 1.1%, snapping a 6-day winning streak. The 30-stock average was dragged down by a 5.9% drop in Boeing. The S&P 500 lost 0.8% on Tuesday. The index briefly turned positive for the year on Monday.
“After such a ferocious run in recent weeks, the stock market was overdue for a correction or at least a pause,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Upside price momentum was becoming extreme and sentiment indicators a bit too bullish. Profit-taking won over [Tuesday], particularly in those economically sensitive area which have done the best in recent weeks.”
The Nasdaq Composite was the outperformer, closing at an all-time record high, as investors piled back into technology darlings. The index jumped 0.3% on Tuesday.
Big gains in Facebook, Amazon Apple, Netflix and Google-parent Alphabet pushed the tech-heavy Nasdaq Composite over the 10,000 threshold for the first time ever; however, it closed below this level.
“Being overweight stocks most sensitive to an economic revival worked well in recent weeks but not earlier in the year and not today,” added Paulsen. “Alternatively, owning high-growth, new-era stocks worked well earlier in the year and did very well today but not in the last couple weeks.”
—CNBC’s Jeff Cox contributed to this report.
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