NEW YORK (AP) — The U.S. stock market is wavering Wednesday after several officials at the Federal Reserve indicated they may raise interest rates before the end of the year.
The S&P 500 fell 0.6% and erased an earlier, modest gain after the Fed released projections showing policymakers see the federal funds rate ending this year and the next two at higher levels than they had been forecasting a few months ago. Higher interest rates can keep a lid on inflation, but they also slow the economy and hurt prices for investments.
The Dow Jones Industrial Average went from a gain of 281 points before the Fed’s announcement to a dip of 86 points, or 0.2%, as of 2:25 p.m. Eastern time. The Nasdaq composite slipped 0.6%.
In the bond market, Treasury yields rose after nine of 18 policymakers at the Fed said they are projecting at least one increase to the federal funds rate by the end of this year. One policymaker did not submit a forecast following the first meeting by the Fed since Kevin Warsh took over as chair.
The yield on the 10-year Treasury, which influences rates for mortgages and other loans going to U.S. households and businesses, rose to 4.45% from 4.43% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for Fed action, jumped more. It climbed to 4.14% from 4.05%.
High yields in bond markets worldwide caused by worries about inflation have been threatening to slow economies and undercut prices for all kinds of investments.
In the stock market, SpaceX erased an early gain and dropped 2.4%. It’s potentially on track for its first loss since its ballyhooed debut on the U.S. stock market last week.
That helped overshadow a jump of 19.1% for La-Z-Boy, which reported stronger profit and revenue for the latest quarter than analysts expected. It benefited from revenue made at newly opened stores, though Chief Financial Officer Taylor Luebke said the company continues to have “a measured view” of the broad sales environment.
A report released Wednesday said retailers across the country saw their revenue grow at a faster pace in May than economists expected, offering hope that solid spending by consumers can support the economy. But high inflation has also made U.S. shoppers feel more discouraged about their finances.
Iran is set to immediately take steps to reopen the Strait of Hormuz once the deal is signed, and that would allow oil tankers to exit the Persian Gulf once again and deliver crude to customers worldwide. The hope is that will take pressure off inflation.
Oil prices were steadier Wednesday following sharp slides earlier in the week on optimism about the tentative U.S.-Iran deal to get the global flow of oil going again. The price for a barrel of Brent crude oil rose 0.5% to $79.35. It’s still above its roughly $70 price from before the war, but it’s well below its $100-plus price from a few weeks ago.
Iran is set to immediately take steps to reopen the Strait of Hormuz once the deal is signed, and that would allow oil tankers to exit the Persian Gulf once again and deliver crude to customers worldwide. The hope is that will take pressure off inflation.
In stock markets abroad, indexes were mixed across Europe and Asia.
London’s FTSE 100 added 0.1% after a report showed U.K. inflation remained at 2.8% in May.
South Korea’s Kospi jumped 1.6%, and Hong Kong’s Hang Seng fell 0.7% for two of the world’s bigger moves.
AP Business Writers Chan Ho-him, Matt Ott and Elaine Kurtenbach contributed to this report.
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