New York, June 17, 2026, 16:06 (EDT)
- The S&P 500 dropped 1.2%. The Dow was down 506.51 points, and the Nasdaq lost 1.3% following the Federal Reserve decision.
- Fed kept rates steady at 3.50%–3.75%. New projections from the central bank now signal higher inflation and rates into 2026.
- Tech lost ground again after SpaceX hit new highs. Retail sales came in stronger, keeping eyes on inflation that hasn’t eased.
U.S. stocks slumped late Wednesday. The Federal Reserve kept rates unchanged, but markets didn’t find much hope for a rate cut soon. The S&P 500 slid 91.23 points, or 1.2%, to 7,420.12. The Dow Jones Industrial Average dropped 506.51 points, or 1.0%, to 51,493.16. The Nasdaq Composite was down 354.69 points, or 1.3%, closing at 26,021.66.
Fed Keeps Rate Steady as Warsh Chairs First MeetingThe Fed held its benchmark rate at 3.50% to 3.75%, keeping its main policy tool unchanged in Kevin Warsh’s first meeting as chair. The call was unanimous, 12-0. That held off a recent relief trade and put rates back in focus. The central bank said it still sees inflation as high and repeated its price stability pledge.
The projections hit. The Fed’s “dot plot”—the chart with policymakers’ rate guesses—now shows a median 2026 funds rate of 3.8%, higher than the 3.4% from March. Median inflation for 2026 jumped, now at 3.6%, up from 2.7%. Core PCE, which cuts out food and energy, moved to 3.3% from 2.7%. Federal Reserve
The statement landed as a hawkish turn, analysts said, signaling tighter policy than markets were set for. Michael Pearce at Oxford Economics said Warsh “took an axe” to the statement. Kay Haigh at Goldman Sachs Asset Management said she still doesn’t expect a hike but called the “path…narrow.” Tom Graff at Facet said the move was “a bit more hawkish.” Reuters
Markets tied to rates shifted with equities. According to Reuters, after the Fed decision, short-term U.S. rate futures leaned toward a hike by September instead of a pause. The dollar also pushed higher on the euro as traders looked at inflation risk.
Growth stocks took a hit. SpaceX fell 5.2% Wednesday, after jumping Tuesday and closing above Amazon’s market cap for the first time—though it briefly topped Microsoft, too. Amazon lost 3.5%, Microsoft was down 3.9% and Nvidia dropped 1.4%. Higher rates usually drag on long-duration growth names, as their profits are further out.
Fed stays patient as retail sales beat. May U.S. retail sales climbed 0.9%, more than the 0.5% consensus from Reuters-polled economists. Service-station sales jumped 3.4%. Higher spending lifts growth, but the strong print complicates the Fed’s case that inflation is slowing.
The risk isn’t one-way. If oil prices keep falling and consumers ease up on spending, but unemployment stays low, the market might level out. But hostilities in the Middle East could flare again, or a tech pullback could hit wealthy spenders. That would push up energy inflation and raise the odds of more Fed hikes, which could drag stocks lower. Gus Faucher at PNC told Reuters the risks for consumer spending are on the downside, and a tech selloff could make high earners cut back, too.
Single-name action was part of the afternoon chop. Shares of CME Group slipped after news that CEO Terry Duffy will leave the company. Smartbird, the company rebranding from Allbirds, soared on word of its new name and incoming chief executive.
Market conditions have turned tougher. Consumption is staying strong, inflation forecasts are moving up, and the Fed chair is cutting back on forward guidance. Investors are more dependent on each new report. Wednesday’s message stood out: no sign of a cut, but renewed risk of more hikes. Stocks dropped.
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