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Dow Jones Falls Over 250 Points After Fed Raises Inflation Estimates

The Dow Jones Industrial Average traded lower in today’s market after the Federal Reserve said it sees interest rates rising sooner than expected. But over the last hour of trading, the major indexes all recouped part of their earlier losses and closed off their intraday lows. The Nasdaq composite traded close to break-even after regaining its earlier loss. Blue chips led the downside on Wednesday with the Dow down over 250 points.




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Stock Market Today

At the close, the Nasdaq held a loss of 0.2%. The S&P 500 declined 0.5%, while the Dow Jones industrials fell about 0.8%. Meanwhile, the small-cap Russell 2000 index fell 0.2% after paring an earlier loss. Volume was running higher on the Nasdaq and on the NYSE vs. the close on Tuesday, according to early data.

Stocks were rocked after the Federal Reserve said it sees interest rates rising sooner than previously expected. Fed officials now plan to lift the benchmark rate from near zero to 0.6% by the end of 2023. In March, Fed officials said they expected to hold it steady throughout that year. The Fed said it remains committed to asset purchases and did not indicate when it will start paring back the purchasing program.

“Progress on vaccinations has reduced the spread of Covid-19 in the United States,” the Fed said in a statement. “Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.”

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34034.86 -264.47 -0.77
S&P 500 (0S&P5) 4223.76 -22.83 -0.54
Nasdaq (0NDQC ) 14039.68 -33.18 -0.24
Russell 2000 (IWM) 229.94 -0.42 -0.18
IBD 50 (FFTY) 44.62 -0.30 -0.67
Last Update: 4:36 PM ET 6/16/2021

The Fed also raised its headline inflation expectations for 2021 to 3.4% from a 2.4% projection in March. But the Fed statement said inflation pressures are “transitory.”

The benchmark 10-year Treasury yield inched a few basis points higher, and remains at about 1.58%. The longer-dated 30-year Treasury yield was little changed.

Stocks In The News

As for growth stocks, the Innovator IBD 50 ETF (FFTY) fell 0.7% as shares dipped below the 50-day line of support. Stocks leading the downside in the index included Lovesac (LOVE), Corsair (CRSR) and Snap (SNAP).

IBD 50 stock Generac (GNRC) was an outperformer on Tuesday with a gain of over 2%. Shares broke out from a 364.10 consolidation buy point. The stock maintains superior IBD Ratings with a best-possible 99 Composite Rating and a 93 Relative Strength Rating. But investors should note the current base is a stage-four base, which indicates a lower probability of success than with an earlier stage base.

On Wednesday, a few stocks from the MarketSmith Growth 250 list broke out and traded inside buy zones.

Signature Bank (SBNY) gained over 6% and broke out from a flat base with a 260.47 buy point, before closing below the entry. The buy zone tops out at 273.49. The stock has surged over 90% since the start of 2021. Standout features for this stock are its IBD Ratings, with a 91 Composite, a 92 RS Rating and an 81 EPS Rating.

Meanwhile, investment management firm The Carlyle Group (CG) gained over 1% as shares briefly traded inside the key buy zone. The company initially broke out from a flat base with a 45.33 buy point but fell back below the entry in afternoon trading.

Finally, Avantor (AVTR) broke out from a cup base with 34.09 buy point, before closing just below the entry. The buy zone tops out at 35.79. Shares of the medical research equipment firm hold a solid 82 RS Rating and a strong 96 Composite Rating.

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