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U.S. stocks suffer fifth straight loss, even as Fed holds rates steady

Published 06/15/2016, 04:47 PM
Updated 06/15/2016, 04:54 PM
The Dow, NASDAQ and S&P 500 all fell slightly on Wednesday

The Dow, NASDAQ and S&P 500 all fell slightly on Wednesday

Investing.com -- U.S. stocks closed slightly lower on Wednesday, turning negative just before the close of trading, after the Federal Reserve held short-term interest rates steady at its June monetary policy meeting.

Stocks on the major indices were relatively flat following the Fed's release at 2:00 p.m. eastern standard time, before a wave of sell orders pushed stocks into negative territory in the final half-hour of trading. Earlier, the Federal Open Market Committee voted unanimously to leave the target range of its Federal Funds Rate unchanged at a level between 0.25 and 0.50%. Notably, the FOMC downgraded its view of labor market conditions and lowered its long-term path for the Federal Funds Rate over the next two years.

The Dow Jones Industrial Average fell 34.65 or 0.20% to 17,640.17, while the NASDAQ Composite index dropped 8.62 or 0.18% to 4,834.93, each suffering their fifth straight losing session. The S&P 500 Composite index, meanwhile, lost 3.82 or 0.18% to 2,071.50, as six of 10 sectors closed in the red. Stocks in the Health Care and Utilities industries lagged, each falling by more than 0.60%. Stocks in the Basic Materials, Financials and Consumer Goods sectors led.

While the FOMC left its median Federal Funds Rate forecast for 2016 unchanged at 0.9%, six members of the FOMC recommended just one rate hike by the end of the year. In the FOMC's last projections in March, only one member of the Committee recommended a single rate hike in 2016. By comparison, the FOMC said in median projections in December that it could implement as many as four rate hikes this year.

On a long-term basis, the FOMC lowered its median projection for the Fed Funds Rate in 2017 by 0.25% to 1.6%. The FOMC also cut the median projection on the Fed Funds Rate outlook for 2018 by 0.625% to 2.4%. In an exclusive interview with Reuters, bond guru Jeffrey Gundlach of Doubleline Capital said the "rate hike cycle has left the building," while the Fed would be lucky if it raises rates once this year. Last December, the FOMC halted its seven-year zero interest rate policy by approving its first rate hike in nearly a decade.

The top performer on the Dow was Home Depot Inc (NYSE:HD), which gained 1.29 or 1.03% to 126.53. It came after Home Depot (NYSE:HD) filed an antitrust lawsuit against Visa Inc (NYSE:V)and Mastercard Incorporated (NYSE:MA) on Wednesday, claiming the credit card companies colluded in preventing the adoption of chip-based cards at its stores nationwide. The credit cards with embedded computer chips reduce the chance that criminals can hack into a retailer's payment system with counterfeit credit cards, Home Depot said. At the same time, the home improvement chain claimed in the lawsuit that the credit card companies are aware that payments made by a signature alone provide "virtually no protection" to numerous types of payment card fraud. Top U.S. bank executives have claimed they don't want to overburden consumers by requiring a pin at the checkout line. The worst performer was INTC, which fell 0.53 or 1.65% to 31.61.

The biggest gainer on the NASDAQ was Biomarin Pharmaceutical Inc (NASDAQ:BMRN), which added 2.96 or 3.65% to 84.01, after analysts at Credit Suisse (SIX:CSGN) reaffirmed the California-based pharmaceutical company's buy rating earlier in the week. Credit Suisse also lifted BioMarin's price target from $103.00 to $114. Shares in BioMarin are still down by more than 33% over the last year.

The worst performer was Whole Foods Market Inc (NASDAQ:WFM), which tumbled 1.60 or 4.92% to 30.92. On Wednesday morning, reports surfaced that Whole Foods received a warning letter from the U.S. Food and Drug Administration (FDA) earlier this month after the FDA discovered "serious violations" of its regulations at an inspection in Massachusetts. Among the charges, Whole Foods employees failed to maintain sanitary conditions at its prep stations and did not wash their hands between completing multiple job duties, according to the FDA.

On the New York Stock Exchange, advancing issues outnumbered declining ones by a 1,825-1,181 margin.

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