Fed leaves rates unchanged
The Federal Reserve expects to hold interest rates near zero through 2023 to bolster U.S. economy. FOX Business’ Edward Lawrence with more.
U.S. equity futures dropped ahead of the Thursday session on Wall Street as concerns mount about further coronavirus stimulus.
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The major futures indexes are suggesting a decline of 1.3%, or more than 300 Dow points.
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The U.S. Federal Reserve indicated on Wednesday its benchmark interest rate will stay close to zero at least through 2023 but announced no additional stimulus plans.
Chairman Jerome Powell promised the Fed “we will not lose sight of the millions of Americans that remain out of work” but gave no indication of new stimulus.
Following the Fed comments, Wall Street's benchmark S&P 500 index closed down 0.5%. The Dow Jones Industrial average rose 0.1%, to 28,032.38. The Nasdaq composite lost 1.3% to 11,050.47.
|I:DJI||DOW JONES AVERAGES||28032.38||+36.78||+0.13%|
|I:COMP||NASDAQ COMPOSITE INDEX||11050.469071||-139.85||-1.25%|
On Thursday, the Labor Department is expected to say the number of claims for unemployment benefits declined to 850 thousand last week, down 34,000 from the previous week’s tally of 884,000 and the lowest reading since March 14, right before the coronavirus lockdowns.
The Commerce Department is expected to say that the number of new homes being built slipped 1.2% in August to a seasonally adjusted annual rate of 1.478 million. For context, housing starts plummeted to a 5-year low of 934,000 at the pandemic low in April. Permits for future construction are anticipated to increase 2.5% to 1.52 million.
Finally, the Philly Fed is out with its September index of manufacturing activity for eastern Pennsylvania, south Jersey and Delaware. It’s expected to slip to 15 from 17.2 in August.
FED SIGNALS INTEREST RATES WILL STAY NEAR ZERO THROUGH 2023 TO BOLSTER US ECONOMY
In Asia on Thursday, the Japanese central bank left its interest rates unchanged and gave no indication about possible additional stimulus.
The Nikkei in Tokyo sank 0.7%, the Hang Seng in Hong Kong retreated 1.5% and China's Shanghai Composite Index lost 0.4%.
U.S. investors are counting on Congress for a new support package after additional unemployment benefits that help to support consumer spending expired, but legislators are deadlocked on its possible size.
The Fed forecast the economy will shrink 3.7% this year, an improvement over its June outlook of a 6.5% drop. The Fed projected an unemployment rate at the end of the year of 7.6% instead of the 9.3% projected in June.
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In energy markets, benchmark U.S. crude oil for October delivery lost 49 cents to $39.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.88 on Wednesday to $40.16. Brent crude oil for November delivery shed 43 cents to $41.79 per barrel in London. It gained $1.69 the previous session to $42.22.
The Associated Press contributed to this article.
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