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Stock Market News for Jun 17, 2021

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U.S. stock markets closed lower on Wednesday as the U.S. Federal Reserve indicated potential rate hikes in 2023, and raised its inflation expectations. Moreover, investors’ confidence was dampened by a weaker-than-expected housing starts and building permits data for the month of May. All the three major stock indexes closed the day in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.8%, or 265.66 points, closing at 34,033.67, continuing its losses for the third consecutive session. Notably, 26 components of the 30-stock index ended in red while 4 finished the day in green. Major losers of the Dow were Dow Inc. (DOW - Free Report) and Walmart Inc. (WMT - Free Report) , that lost 2.4% and 2%, respectively. Notably, Walmart carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The tech-heavy Nasdaq Composite closed the day at 14,039.68, down 0.2%, continuing its two-day losing streak, on the back of weak performance by large-cap technology stocks. The S&P 500 fell 0.5%, closing the day at 4,223.70, falling for the second consecutive session. The Utilities Select Sector SPDR (XLU) and the Consumer Staples Select Sector SPDR (XLP) dipped 1.5% and 1.3%, respectively. Notably, ten out of eleven sectors of the benchmark index closed in the negative zone and one in green.

The fear-gauge CBOE Volatility Index (VIX) was up 6.6% to 18.15. A total of 10.90 billion shares were traded on Wednesday, higher than the last 20-session average of 10.38 billion.

Wall Street Ended Lower Following Fed Comments

Wall Street ended lower in Wednesday’s session after the U.S. Federal Reserve’s dot plot of projections showed that 13 members of the Federal Open Market Committee believed that the Fed could increase interest rates in 2023, with majority of them believing that the Fed will hike interest rates at least twice in 2023.

Moreover, the Fed raised its headline inflation projection to 3.4% in 2021, compared to its previous estimate of 2.4%. Meanwhile, core PCE inflation is projected to come in at 3% in 2021, compared to the previous forecast of 2.2%.

Nonetheless, the Fed also raised its real GDP projection for 2021 to 7%, from 6.5% expected earlier and also its 2023 GDP forecast to 2.4%, from 2.2% expected earlier. Moreover, the Fed kept its benchmark short-term interest rates at near zero and also stated that it will continue to buy $120 billion in bonds every month to provide support to the economy.

Economic Data

Investors’ sentiment took a hit in Wednesday’s session as the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,572,000, falling short of the consensus estimate of 1,632,000. However, the reading was higher than the April estimate of 1,517,000, which was revised downward from 1,569,000 reported earlier.

Meanwhile, the report stated that privately-owned housing units authorized by building permits were at a seasonally adjusted annual rate of 1,681,000 in May, missing the consensus estimate of 1,735,000, and also lower than the April estimate of 1,733,000 which was revised downward from 1,760,000 reported earlier.

The Energy Information Administration reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) for the week ending Jun 11, decreased by 7.4 million barrels per day from the previous week. Moreover, crude oil inventories are below the five-year average by about 5%.

The U.S. Bureau of Labor Statistics reported that U.S. import prices rose 1.1% in May, surpassing the consensus estimate of 0.8% increase, and compared to an increase of 0.8% in April, which was revised upward from 0.7% reported earlier. Moreover, the price index for imports excluding fuel increased 0.9% in May, following an increase of 0.7% in April.

Meanwhile, the report further stated that U.S. export prices increased 2.2% in May, outpacing the consensus estimate of 0.75% increase, and compared to an increase of 1.1% in April, which was revised upward from 0.8% reported earlier. Notably, the price index for exports excluding agriculture rose 1.7% in May, compared to an increase of 1.2% in April, which was revised upward from 0.9% reported earlier.

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