US stocks close mostly lower with Fed on hold amid weakening economy
U.S. stocks closed mostly lower as traders parsed the decision by the Federal Reserve to leave interest rates on hold.
The S&P 500 shed 1.87 points to close at 5,980.85. The Dow Jones 30 Industrials fell 44.14 points, 0.1%, to 42,171.66. The Nasdaq Composite Index, which contains more tech exposure, was up 25.18 points or 0.1% to touch 19,546.27 at the closing bell.
As widely expected, the central bank held rates steady as it continues to analyze the effects of President Donald Trump's tariffs. So far, tariffs haven't boosted inflation much and the job market has slowed, but not cratered, giving the Fed time to take a wait-and-see approach to tariffs and now the Israel-Iran conflict.
Since Israel attacked Iran, oil prices have jumped to a near five-month high. Much of the world's oil comes from the Middle East, and if oil prices continue to climb or stay elevated for a while, it could ignite inflation.
Fed decision and economic news
"Economic activity has continued to expand at a solid pace," the Fed said in its Wednesday statement. Yet some of the freshest data suggests that may be starting to slow.
Homebuilders broke ground on fewer properties than expected in May, the Census Department said Wednesday. Housing starts ran at the slowest pace since the COVID-19 lockdowns in 2020.
Also on Wednesday, the Labor Department said first-time claims for jobless benefits had dropped slightly in the most recent week. Still, jobless claims have been trending higher. Oxford Economics called that trend "consistent with a gradual softening in labor market conditions." But Chris Rupkey, chief economist for FWDBONDS LLC wrote "For three weeks now, first-time applications for unemployment compensation have been elevated at levels that are just inches away from signaling an outright recession" in a note to clients.
The 10-year Treasury note was fractionally higher in the afternoon near 4.397%.
Cryptocurrency
The Senate on Tuesday passed legislation to regulate stablecoins, which are a type of cryptocurrency designed to maintain a stable price often by being pegged to a widely-used asset like the U.S. dollar.
The Senate's legislation requires dollar-pegged stablecoins to hold dollar-for-dollar reserves in short-term government debt or similar products overseen by state or federal regulators. The bill now goes to the House, which must decide whether it will take up the bill or negotiate a compromise.
The step is seen as a victory for the crypto industry and a further validation of its wider use. Shares of Circle, a stablecoin provider, surged 34% on Wednesday. But bitcoin fell about 0.7% during the day to trade near $103,943 when the stock market closed.
Financial markets close for Juneteenth holiday
This is a holiday-shortened week for Wall Street: financial markets will be closed on Thursday in observance of the Juneteenth federal holiday.
This story has been updated to add information.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.