US close: S&P 500 at three-month low in FOMC aftermath

(Sharecast News) - US stocks dropped on Thursday, with the S&P 500 and Nasdaq both falling to their lowest levels since late-June, as rising bond yields and hawkish comments from the Federal Reserve weighed on sentiment. The Dow Jones Industrial Average finished down 1.1% at 34,070, the S&P 500 slipped 1.6% to 4,330 while the Nasdaq dropped 1.8% to 13,224. This was the S&P 500's lowest close since 26 June, and the Nasdaq's lowest close since 7 June.

Stocks were extending their sell-off on Wednesday after the conclusion of the Federal Open Market Committee meeting. While the Fed left the Federal Funds Rate at the 5.25-5.5% range, the majority of voting members said another hike before the end of the year was probable.

The committee indicated that interest rates would only be lowered to around 5% by the end of 2024, suggesting that they remain committed to a 'higher-for-longer' strategy.

Meanwhile, at a press conference following the meeting, chair Jerome Powell said he still needed to see "convincing evidence" that higher interest rates are having the desired effect on inflation before the FOMC can begin to loosen monetary policy.

"No one really expected the pause to be accompanied by such a dramatic shift in the dot plots, but perhaps this time the market will really believe that the Fed is determined to leave rates at their current elevated levels until inflation is well and truly slain," said Chris Beauchamp, chief market analyst at IG.

Meanwhile, government bonds fell on Thursday after economic data came in ahead of expectations. Initial jobless claims totalled 201,000 in the week to 15 September, down from a revised 221,000 previously and well below the 225,000 forecast.

The yield on a 10-year Treasury was up a further 8 basis points at 4.494%, its highest since 2007. Two-year yields were at their highest since 2006, while the 30-year yield rose to its 2011 high.

FedEx delivers

FedEx impressed the market with its first-quarter results as adjusted earnings rose 32% to $4.55, well ahead of the $3.73 consensus forecast.

Shares in Fox Corp jumped on the news that Rupert Murdoch stepping down as chairman, with his son Lachlan stepping in to head the ship.

Media groups Paramount and Walt Disney were performing well on the news that the Writers Guild of America strike could be nearing an end with studios and writers close to an agreement.

Arm finished in the red again as its fall from grace continues after debuting on the Nasdaq last week. The stock, which floated at $51, touched a high of $69 on the first day of trading, but has since been under heavy selling pressure. The share price actually dipped below the IPO price during Thursday's session, hitting a low of $49.85.