NEW YORK, June 18 (Xinhua) -- U.S. stocks ended mixed on Wednesday, following the Federal Reserve's latest policy update, where the central bank kept interest rates steady.
The Dow Jones Industrial Average fell by 44.14 points, or 0.10 percent, to 42,171.66. The S&P 500 sank 1.85 points, or 0.03 percent, to 5,980.87. The Nasdaq Composite Index increased by 25.18 points, or 0.13 percent, to 19,546.27.
Seven of the 11 primary S&P 500 sectors ended in red, with energy and communication services leading the laggards by losing 0.68 percent and 0.67 percent, respectively. Meanwhile, technology and utilities led the gainers by going up 0.36 percent and 0.25 percent, respectively.
The Fed kept interest rates unchanged on Wednesday, leaving the federal funds rate in the 4.25 percent to 4.5 percent range, as policymakers continued to weigh the economic fallout from U.S. President Donald Trump's expanding tariff regime.
In its latest policy statement, the central bank offered a sobering view of the economic landscape, acknowledging persistent inflation pressures even as growth slows. Fed officials now expect consumer prices to rise 3 percent in 2025, up from the previous estimate of 2.7 percent, while economic growth is projected to decline to 1.4 percent, down from 1.7 percent.
Trump's tariff policy is undoubtedly a contributing factor. "What we are waiting for to reduce rates is to understand what will happen with the tariff inflation. There is a lot of uncertainty about that," Fed Chair Jerome Powell said. "Ultimately, the cost of the tariffs has to be paid."
The Fed also released its latest Summary of Economic Projections (SEP), offering a glimpse into how policymakers see interest rates evolving over time. The widely watched "dot plot" showed that the median forecast for the federal funds rate at the end of 2025 remains at 3.9 percent, unchanged from the March estimate. Seven of the 19 participants indicated they wanted no cuts this year, up from four in March.
"After the June meeting, we still don't expect any rate cuts this year. A large share of the committee has moved towards this view, and we expect the migration to continue as tariff-driven inflation starts to hit the data," said analysts from Bank of America Global Research later Wednesday.
But central bankers appear torn between competing pressures: a job market that's clearly cooling and price increases that remain uncomfortably high. The Fed revised its 2025 unemployment forecast slightly higher to 4.5 percent, indicating growing concerns about a weakening job market.
"The Fed is stuck," said one analyst. "They're being pulled in opposite directions -- inflation isn't falling fast enough, and the labor market is losing steam."
One of the clearest signs of that softening is in continuing jobless claims, which track Americans receiving unemployment benefits for multiple weeks. Last week, that number climbed to just under 2 million, the highest level since November 2021. While still low by historical standards, the steady upward trend suggests more workers are struggling to find new jobs.
"Uncertainty about the economic outlook has diminished but remains elevated. The (Federal Open Market) Committee is attentive to the risks to both sides of its dual mandate," the committee said.
"People can look at the same data and they can evaluate the risks differently as you know," Powell added. "And that includes the risk of higher inflation, the risk that will be more persistent, the risk that the labor market will weaken. People are going to have different assessments of that risk."
Markets remained jittery, not only from economic signals, but also from the growing geopolitical uncertainty in the Middle East. Stocks have swung sharply in recent days as investors try to gauge the risk of broader conflict. On Wednesday, Trump told reporters outside the White House that the Iranians had reached out and signaled that they would send a delegation to Washington for negotiations.
Hostilities between Israel and Iran extended into a sixth consecutive day on Wednesday, as tensions escalated further with a stark warning from Iran's Supreme Leader Ayatollah Ali Khamenei who declared that Iran will not surrender and cautioned that any U.S. involvement in the conflict would "undoubtedly be met with irreparable damage." His remarks heightened global concern that the crisis could widen into a broader regional war, drawing in more international players and further rattling global markets.
