US Stock Market Overview – Stocks Close Mixed as Nasdaq Hits a New Fresh High

US stocks were mixed on Wednesday with the Nasdaq hitting a fresh all-time high and continuing to push higher. The value stocks in the S&P 500 index in the Dow Industrials took at break from the recent rally. Most sectors in the S&P 500 index were lower, led down by Energy and Financials, technology was the best performing sector. US consumer prices fell for the 3^rd consecutive month. The Fed kept interest rates unchanged but painted a bleak picture of future economic activity.

CPI Declines for 3^rd Straight Month

The US consumer price index fell for a third straight month in May and underlying inflation was weak caused by the COVID-19 pandemic. The Labor Department reported that the consumer price index dipped 0.1% last month after plunging 0.8% in April, which was the largest decline since December 2008. On a year over year basis in May, the CPI gained 0.1%. That was the smallest year-on-year rise since September 2015 and followed a 0.3% increase in April. Economists had forecast the CPI would be unchanged in May and gain 0.2% year-on-year.

The Fed Kept Rates Unchanged

The Federal Reserve left interest rates unchanged and near zero on Wednesday as the central bank projected a slow economic recovery from the pandemic-induced recession. The Fed announced their first economic projections this year.  Fed officials forecast that they expect the unemployment rate to end 2020 at 9.3% and remain elevated for years, coming in at 5.5% in 2022. Chairman Powell in a press conference said that the Labor Department report likely understated the unemployment rate.

The Fed chair said that inflation has fallen below its target and it will do whatever it takes to get it back in a range near 2%. The Fed said the will act forcefully and actively and do whatever it takes to generate full employment. The Fed reported that output is expected to be 6.5% lower at the end of this year than it was in the final quarter of 2019. The new forecasts predict a much slower path back to economic strength than the Trump administration