Stock Market News From June 12, 2024: Dow Slides After Fed Decision; CPI Report; Apple, Nvidia, Tesla, Alphabet, and More Movers (2024)

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To follow all the latest news from the Fed's meeting and Chair Jerome Powell's press conference, click here._

Earlier, the latest inflation report was cooler than expected. The headline Consumer Price Index increased by 3.3% year over year in May vs. 3.4% expected by economists, according to FactSet.

After the bell, Broadcom announced a 10-for-1 stock split.

A cooldown in inflation helped the S&P 500 and Nasdaq Composite mark their third record closes in three days.

The S&P 500 was up 0.9%. The Nasdaq Composite was up 1.5%. The Dow Jones Industrial Average lagged behind with a decline of 36 points, or 0.1%.

The yield on the 2-year Treasury note fell to 4.748%. The 10-year yield fell to 4.294%.

Yields fell and stocks soared after the consumer price index for May came in flat on a monthly basis in May, compared to economist expectations for a 0.1% uptick in prices.

But stocks later gave back a solid chunk of their gains and the Dow turned lower after the Federal Open Market Committee signaled its members only expect one interest rate cut of 25 basis points through the end of the year. The “dot plot” previously suggested three cuts.

Federal Reserve Chair Jerome Powell didn’t offer too much clarity during his press conference. He emphasized that officials are making their best guesses even though they don’t know what the data ahead will show.

Powell said the CPI was encouraging after hotter data earlier this year, but it will take more than one month of cooling inflation data to convince central bank officials inflation is coming down enough to start cutting rates.

“If the economy remains solid and inflation persists we're prepared to maintain the target range for the federal funds rate as long as appropriate,” Powell said. “If the labor market were to weaken unexpectedly or if inflation were to fall more quickly than anticipated, we're prepared to respond.”

Fed-funds futures now suggest a 61.7% chance of at least one cut by the September FOMC meeting, up from 52.8% on Tuesday.

Federal Reserve Chairman Jerome Powell’s statement on Wednesday gave traders one solid signal: The central bank stands ready to play savior in market turmoil.

The main indexes have closed higher in recent weeks even while investers were given weak macroeconomic data.

One justification offered by strategists is the “Fed put.” The concept pushes traders to buy every dip in hopes the central bank will step in to loosen policy when the U.S. economy starts taking a decisive turn for the worst.

Powell, in his opening speech, reinforced this narrative.

“If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we are prepared to respond,” he said.

Federal Reserve Chairman Jerome Powell did his best to not say anything remotely shocking about interest rates, inflation, and the economy during his press conference on Wednesday.

Powell pretty much stuck to the classic playbook: The Fed is data-dependent; decisions are made on a meeting-by-meeting basis; getting inflation under control is still the main priority.

In other words, Powell channeled one of my favorite Radiohead songs. “No alarms and no surprises please.” And that’s mostly what Wall Street wanted to hear.

Yes, stocks were significantly higher ahead of the Fed's rate decision and Powell's presser following news earlier today that the pace of inflation continued to cool. And the market did wobble a bit after the Fed statement and release of the new summary of economic projections, which showed that the Fed is now likely only going to cut rates once this year. There may have been a slight degree of disappointment that Powell stopped short of guaranteeing a rate cut in the next few months.

Still, the S&P 500, Nasdaq, and small-cap focused Russell 2000 were hanging on to solid gains late Wednesday even as the Dow slipped into the red. The bottom line? The Fed statement, new dot plot, and Powell’s presser didn’t really change the market narrative all that much.

“At the end of the day, a calendar is just a mental reference point and the reality is rate cuts are likely closer than they appear,” said Charlie Ripley, senior investment strategist for Allianz Investment Management, in a report Wednesday afternoon.

Barring a significant shock that pushes inflation sharply higher again, the next move for interest rates is lower. It’s just a question of when, not if, the Fed will start easing.