Stock market news live updates: Stocks mixed after Fed outlook signals rate hikes - Yahoo Finance

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Stocks traded mixed on Thursday as investors contemplated the Federal Reserve's latest monetary policy decision and updated projections, which signaled a quicker path to higher interest rates than previously anticipated.

The S&P 500 and Dow each fell, while the Nasdaq held in slightly positive territory. Treasury yields steadied after surging following the Fed decision on Wednesday, and the 10-year yield hovered just above 1.55%.

Each of the three major stock indexes ended Wednesday's session lower after the Fed's new projections pointed to two rate hikes by year-end 2023. Federal Open Market Committee members also upgraded their forecasts for economic growth and inflation, affirming market participants' concerns over sustainably higher prices. While the Fed left rates on hold at the conclusion of this month's meeting and kept the pace of asset purchases unchanged, market participants are now gearing up for a potentially less accommodative tilt to Fed policy.

"There was a more hawkish tone from the Federal Reserve, mostly coming from the Committee but [Fed Chair Jerome] Powell also offered an upbeat assessment of the economy with small steps toward the exit," Michelle Meyer, Bank of America U.S. Economist, said in a note Wednesday. "The big surprise came from the dots where the median expectation is now for 2 hikes in 2023 with only 2 dots away from 2022 also showing a hike."

"While Fed officials are talking about 'transitory' inflation, some clearly believe in greater persistence, which was reflected in upside risks to the PCE [personal consumption expenditures outlook] in the SEP [summary of economic projections]," she added.

On the other hand, however, the Fed also acknowledged that the labor force could be under pressure for some time, given the considerable difficulties the economy has had in recovering all of the jobs lost during the pandemic even as more reopenings take place. Powell said during his press conference Wednesday that the economy ultimately remained "a ways off" from reaching "substantial further progress" toward the Fed's goal of maximum employment that would signal a start to tapering.

But much of the employment data has been trending in the right direction, albeit with some moderation in the rate of improvements, and some lingering concerns over labor supply shortages. The Labor Department's weekly jobless claims report Thursday morning showed that new filings rose for the first time in seven weeks last week, unexpectedly rising from a pandemic-era low. However, in the coming weeks, more states will be rolling back enhanced federal unemployment benefits ahead of their official September expiration date, in a move that may bring down the total number of claimants across all programs. As of late May, more than 14.8 million Americans were claiming unemployment benefits of some form.

"Even with the eventual tapering of asset purchases, and subsequent moderate increase in interest rates, we think it’s clear that the backdrop for the economy will generate significant employment improvement," Rick Rieder, BlackRock's chief investment officer of global fixed income, said in an email.

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9:50 a.m. ET: 'It's going to be more and more challenging for investors to find pockets of attractive growth opportunities' in U.S. large-cap stocks: CIO

Even with Wednesday's pullback, the U.S. major stock indexes are still hovering near all-time highs, raising questions over where opportunities for more upside might lie.

According to at least one chief investment officer, investors may want to consider looking beyond U.S.-based stocks with large market capitalizations, given the amount of run-up many of these shares have already seen.

"It's going to be more and more challenging for investors to find pockets of attractive growth opportunities, at least as it relates to U.S. large cap stocks," Kevin Manh, Hennion & Wash chief investment officer, told Yahoo Finance. "But we still believe there's value and opportunities in smaller cap stocks. We believe it makes sense right now to consider investing overseas in international developed and emerging markets."

"And of course there are certain sectors that still provide attractive upside potential, notably biotech in particular," he added. "PwC is is forecasting a record year for biotech M&A activity and we know that there are more rare and chronic diseases that we know we need healthcare solutions for even beyond COVID-19."

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9:34 a.m. ET: Stocks open mixed as investors digest Fed decision

Here's where markets were trading Thursday morning:

S&P 500 (^GSPC): +0.74 (+0.02%) to 4,224.44
Dow (^DJI): +12.1 (+0.04%) to 34,045.77
Nasdaq (^IXIC): -6.03 (-0.04%) to 14,038.13
Crude (CL=F): +$72.23 (+0.11%) to $72.23 a barrel
Gold (GC=F): -$77.3 (-4.15%) to $1,784.10 per ounce
10-year Treasury (^TNX): -1.6 bps to yield 1.553%

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8:44 a.m. ET: New jobless claims unexpectedly rose last week, ending a six-week streak of improvements

New unemployment claims rose for the first time in seven weeks last week, disappointing economists looking for new claims to fall to a fresh pandemic-era low.

Initial jobless claims came in at 412,000 for the week ended June 12. This was well above the 360,000 expected and 375,000 reported for the prior week. Before the pandemic, new claims were averaging a bit over 200,000 per month throughout 2019.

Continuing claims, reported on a one-week lag, also unexpectedly increased for the period ended June 5. These came in at 3.518 million verses the 3.425 million anticipated, according to Bloomberg consensus data.

Overall, 14.8 million Americans were still claiming benefits of some form, based on this week's report. The majority of these comprised workers, or 11.3 million, were claiming benefits through the federal crisis-era Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation.

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