US Stock Market Wrap June 18: Dow Slips After Fed Pause, Tests Support
U.S. markets ended mixed following the Federal Reserve's decision to keep rates unchanged, with Dow Jones testing support after the retreat.
Quick overview
- U.S. markets ended mixed after the Federal Reserve decided to keep interest rates unchanged, with the Dow Jones testing support levels.
- The Fed revised its inflation forecast upward to 3.0% for 2025 while trimming GDP growth to 1.5%, indicating caution regarding economic growth and inflation risks.
- The Fed's dot plot suggests a slower easing path, with expectations for rate cuts pushed to 2025 and beyond, contrasting with earlier projections.
- Market reactions were mixed, with the Dow Jones and S&P 500 declining slightly, while the Nasdaq and Russell 2000 showed modest gains.
U.S. markets ended mixed following the Federal Reserve’s decision to keep rates unchanged, with Dow Jones testing support after the retreat, while Fed Chair Powell’s comments highlighted economic resilience and emerging inflation risks.
Fed Holds Rates Steady Amid Caution on Inflation and Growth
U.S. equity markets ended mixed on Wednesday as the Federal Reserve left interest rates unchanged at the June FOMC meeting. While the decision was expected, investors were more focused on the Fed’s updated projections, which signaled a cautious path ahead and delayed expectations for the first rate cut.
Growth and Inflation Outlook Adjusted
The Fed slightly revised its 2025 inflation forecast upward to 3.0%, while GDP growth was trimmed to 1.5%. The unemployment rate was nudged higher to 4.5%. These changes reflect the impact of slower growth and lingering inflation pressures, particularly from tariffs and elevated service prices.
Despite these changes, the long-run neutral rate was kept at 3.0%, reinforcing that policymakers still view current rates as restrictive. Chair Jerome Powell emphasized during his press conference that the projections remain “highly conditional,” and that the Fed is not ready to commit to a clear easing timeline.
Dot Plot Shows Slower Easing Path
The Fed’s dot plot revealed a more divided outlook. Most participants now expect two rate cuts in 2025, with two more likely in 2026, and only one in 2027. In contrast, a growing number of members foresee no rate cuts in 2024 at all—a notable shift from the March projections.
Markets React Cautiously – Dow Tests the 50 Weekly SMA
Stocks showed mixed performance. The Dow Jones slipped 44 points to close at 42,171.66, down 0.10%, while the S&P 500 was virtually flat at 5,980.87. The Nasdaq gained 25 points to end at 19,546.27, up 0.13%, while the Russell 2000 outperformed, climbing 0.52% to 1,112.96.
Large-cap gainers included SoFi Technologies, Robinhood, and Intel, while Mastercard and Visa led declines on payment-related concerns.
Major US Index Closures
- Dow Jones Industrial Average
↳ Closed at 42,171.66, down 44.14 points (-0.10%)
↳ Financials and defense weighed on the index amid broader concerns around valuations. - S&P 500 Index
↳ Ended at 5,980.87, down 1.85 points (-0.03%)
↳ Flat performance reflects sector divergence between tech optimism and payment sector weakness. - NASDAQ Composite Index
↳ Closed at 19,546.27, up 25.18 points (+0.13%)
↳ Tech momentum continued, supported by chipmakers and growth-focused ETFs. - Russell 2000 (Small Caps)
↳ Advanced to 1,112.96, up 11.00 points (+0.52%)
↳ Outperformed larger peers as investors rotated into riskier small caps ahead of economic catalysts.
Top Gainers – Large-Cap Standouts
- SoFi Technologies (SOFI): +6.51%
↳ Strength driven by fintech optimism and positive sentiment from retail traders. - Robinhood Markets (HOOD): +4.54%
↳ Continued upward momentum as the company expands into new product lines. - ARK Innovation ETF (ARKK): +4.47%
↳ Strong demand for speculative tech and innovation stocks powered ETF performance. - Intel Corporation (INTC): +3.32%
↳ Gained after a bullish analyst note on chip sector recovery and AI-driven demand. - Super Micro Computer (SMCI): +3.15%
↳ Rose on sustained enthusiasm for AI server infrastructure and strong demand forecasts.
Top Losers – Under Pressure Today
- Mastercard (MA): -5.38%
↳ Tumbled on reports of potential regulatory scrutiny and slowdown in global payment volumes. - Visa A (V): -4.89%
↳ Declined in sympathy with Mastercard amid worries about cross-border payment growth. - PayPal Holdings (PYPL): -2.97%
↳ Fell as fintech laggards continue to underperform in a high-rate environment. - Box Inc (BOX): -2.25%
↳ Pulled back after a downgrade from a major brokerage citing slowing enterprise adoption. - Lockheed Martin (LMT): -2.24%
↳ Pressured by defense budget uncertainty and mild post-rally profit-taking.
Rate Cuts Delayed, Tariffs Add Complexity
Powell reiterated that the Fed is closely monitoring the economic effects of U.S. trade policy, and that the full impact of summer tariffs may not be evident for several months. As a result, analysts now broadly expect the first rate cut to come in December, followed by a slow easing cycle into 2026.
Conclusion: Fed Signals Caution, Markets Remain Divided
While the Fed’s message wasn’t overtly hawkish, it reflected a growing hesitancy to act too soon. With inflation still a concern and growth softening modestly, Powell and the FOMC are keeping policy on pause. Markets are likely to remain range-bound until more decisive data or policy shifts emerge.
Dow Jones Live Chart
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