US stocks fall, Dow down nearly 500 points; Walsh's first Fed meeting sparks yield surge
US stocks fell Wednesday, with the Dow down about 500 points, led by tech stocks, as Treasury yields surged. After Walsh's first Fed meeting, the dot plot turned hawkish, raising c
US stocks fall, Dow drops nearly 500 points; Walsh's first Fed meeting sparks yield surge
On Wednesday, June 18, Beijing time, US stocks fell, with the Dow down about 500 points. Tech heavyweights led the decline, and Treasury yields surged. Multiple Fed officials hinted at possible rate hikes this year to curb inflation, leaving investors uncertain about the monetary policy path.
The Dow fell 507.12 points, or 0.98%, to 51,492.55 points, after hitting an intraday record earlier in the session, marking the third consecutive trading day of record highs. The Nasdaq dropped 354.68 points, or 1.34%, to 26,021.65 points. The S&P 500 lost 91.25 points, or 1.21%, to 7,420 points.
Major tech heavyweights led the decline, with Microsoft, Meta Platforms, Alphabet, and Amazon all closing lower. Hot IPO stock SpaceX also dampened market sentiment, falling for the first time since its listing last Friday. Gains in chip stocks such as Intel and Micron Technology helped cap some of the broader market losses.
This was the first Fed meeting chaired by new Fed Chair Kevin·Walsh. After the two-day meeting, the Fed left interest rates unchanged at a target range of 3.5% to 3.75%.
According to the Summary of Economic Projections, several Fed officials expect a rate hike in 2026. The median year-end estimate for the federal funds rate is now 3.8%, up from 3.4% in the March forecast, suggesting the committee sees at least one rate increase needed in 2026.
Walsh revealed he did not submit a rate forecast, adding to the uncertainty.
After the decision, US Treasury yields jumped, with the 2-year yield rising 16 basis points to 4.208%.
"The market's reaction so far is mainly about the dot plot... its stance is much more hawkish," said Claudia·Sam, chief economist at New Century Advisors. "The inflation situation has changed a lot."
Traders also noted Walsh's repeated emphasis on the Fed's commitment to "price stability" during the press conference, suggesting he may not be as dovish as many expected from a nominee of President Donald Trump.
Jeffrey·Gundlach, CEO of DoubleLine Capital, said: "He is absolutely telling you he plans to achieve price stability. That means... we won't have the kind of loose monetary policy that everyone expected Chairman Walsh might pursue when they were betting on rate cuts in the first quarter. He doesn't sound anything like that today."
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