US Stocks falls after Fed projects increase in interest rates in 2023

The US stock market finished session deeply in negative territory on Wednesday, 16 June 2021, after Federal Reserve raised its inflation expectations and moved up the time frame for interest rates by late 2023, sooner than previously projected. The central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program, which helped to limit market losses.

At the close of trade, the Dow Jones Industrial Average index fell 265.66 points, or 0.77%, to 34,034. The S&P 500 index declined 22.89 points, or 0.54%, at 4,224. The tech-heavy Nasdaq Composite Index dropped 33.17 points, or 0.24%, to 14,040.

Total 10 out of 11 S&P 500 sectors closed down, with utilities (down 1.5%) was worst performer, followed by materials (down 1.2%), consumer staples (down 1.2%), industrials (down 1%), real estate (down 0.9%), and communication services (down 0.8%) sectors, while consumer discretionary (up 0.2%) sector was top gainer.

The policymaking Federal Open Market Committee indicated that rate hikes could come as soon as 2023, after signaling in March that it saw no increases until beyond that year. The latest projections from Fed officials suggest interest rates will be increased to 0.6 percent in 2023 compared to previous projections indicating rates would remain at near-zero levels. Seven officials expect a rate hike as soon as 2022.

The Fed also raised its headline inflation expectation to 3.4% for 2021, a full percentage point higher than the March projection, but the post-meeting statement continued to say that inflation pressures are "transitory."

Among Indian ADR, Tata Motors fell 0.6% to $23.62, Dr Reddys Labs was down 0.2% to $73.55, Vedanta fell 2.7% to $14.22, Wipro fell 1% to $8.10, WNS Holdings fell 0.15% to $77.75, HDFC Bank fell 3.3% to $74.78, and ICICI Bank was down 1.3% to $17.38. INFOSYS added 0.7% to $20.38.

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