US close: Dow closes lower following FOMC update
US stocks turned in a mixed performance on Wednesday following an update on the state of the nation's economy from the Federal Reserve.
At the close, the Dow Jones Industrial Average was down 1.04% at 26,899.99 and the S&P 500 was 0.53% weaker at 3,190.14, while the Nasdaq Composite saw out the session 0.67% firmer at 10,020.35.
The Dow Jones closed 282.31 points weaker on Wednesday, continuing on with the blue-chip index's losses in the previous session that halted its milt-day rally amid heightened concerns around another spike in Covid-19 cases and trade tensions between the US and the EU.
The key event on Wednesday agenda was an update from the Federal Open Market Committee, which started its two-day policy meeting on Tuesday.
The FOMC said it expects the US economy to shrink by 6.5% this year, leading it to keep interest rates close to zero into 2022.
The central bank's move came amid a struggling economy as a result of the Covid-19 pandemic. However, the Fed anticipates that the US economy will return to growth in 2021, with unemployment falling to 9.3% and GDP increasing 5%.
"The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," it said on Wednesday.
Following the statement, the benchmark 10-year Treasury note was nine basis points lower at 0.744% and the yield on the 30-year Treasury bond down 6.9 points at 1.516%.
Also in macro news, mortgage rates held near record lows last week, leading to a wave of refinancing and purchasing applications.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $510,400 ticked up 1 basis point higher to 3.38% for the week ending 5 June, just off last week's all-time low and a whole 1% softer year-on-year. The MBA's refinancing index rose 11.4% to 3,529.0 points, recording its first weekly gain in two months.
Elsewhere, US consumer prices fell for a third straight month in May as underlying inflation remained weak and demand continued to be subdued amid the coronavirus-fuelled recession. The Consumer Price Index fell 0.1% in May accordion to the Labor Department, after decreasing 0.8%.
In the corporate space, Facebook, Apple, Amazon and Microsoft all closed at all-time highs in the previous session and were also helping the Nasdaq stay in the green on Wednesday.
Uber shares were down 4.81% after reports broke that merger talks with rival Grubhub had broken down after European delivery giant Just Eat threw its hat into the ring, while Tesla shares closed nearly 9% higher after a report said it would speed up production of its semi-trucks.
Boeing, Exxon Mobil, Chevron, American Express and JPMorgan Chase shares were all down on Wednesday, weighing on major indices.