Dow slides 282 points, Nasdaq closes at record as investors digest the Fed's latest economic guidance
- US stocks closed mixed on Wednesday after Federal Reserve Chair Jerome Powell provided guidance around the central bank's economic outlook.
- The tech-heavy Nasdaq closed at a record for a second straight day, while the S&P 500 and Dow Jones industrial finished lower.
- Powell said the pandemic could result in permanent economic damage, but also signaled further stimulus efforts.
- The Fed expects to keep interest rates near zero through 2022, according to Powell.
- Read more on Business Insider.
US stocks closed mixed on Wednesday after Federal Reserve Chair Jerome Powell provided guidance around the central bank's economic outlook.
Powell said the pandemic could result in permanent economic damage, but also signaled further stimulus efforts. The Fed expects to keep interest rates near zero through 2022 and maintain its recent pace of bond-buying.
"What is surprising is that on the heels of some V-shape recovery indicators, the Fed sees structural fragility in the US economy," said Mike Loewengart, managing director of investment strategy at E-trade. "Powell has made it clear that he will continue to rely on his full range of tools to keep the US economy healthy as jobs and inflation continue to come under historic pressure.
Here's where US indexes stood at the 4 p.m. ET market close on Wednesday:
- S&P 500: 3,190.14, down 0.5%
- Dow Jones industrial average: 26,989.99, down 1% (282 points)
- Nasdaq composite: 10,020.35, up 0.7%
The Fed's cautious tone suggests that the US economy is not yet out of the woods, but that the central bank will likely take whatever means necessary to keep key metrics afloat, said Loewengart.
Powell's afternoon comments followed 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.
The tech-heavy Nasdaq, which closed at a record high on Tuesday, continued to gain. The increase was led by the so-called FAANG cohort, consisting of Facebook, Apple, Amazon, Netflix, and Google's parent, Alphabet. The heavily weighted group has outperformed the broader market since the late-March market bottom.
Shares of Tesla also surged to a new all-time high, surpassing $1,000 for the first time ever Wednesday, fueled by an analyst upgrade, Chinese car sales, and reports that CEO Elon Musk is pushing the company to ramp up production of its semi-truck.
Stocks tied to the economy reopening fell broadly, including airlines, cruise lines, and banks. Elsewhere, Wells Fargo slipped as much as 9%, while Citigroup and JPMorgan also declined.
Crude oil prices fell as weekly data from the Department of Energy showed that US inventories spiked to a record high. 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.