Nearly all FOMC participants anticipated it would be reasonable to raise interest rates somewhat more by year’s end, Powell said, stressing that the decision to pause hikes doesn’t mean the end of tightening. 

FedEx Corp. (NYSE:FDX) reported slightly better-than-anticipated earnings, but missed revenue estimates and provided disappointing guidance for the upcoming quarters.

Earlier in the day, markets negatively reacted to a hotter-than-expected U.K. inflation rate in May, which fueled expectations for more aggressive Bank of England rate hikes.

Traders increased their expectations for a 25-basis-point Fed rate hike in July, from 62% last week to 79% today. This shift caused U.S. Treasury yields to move higher during the session.

Cues From Wednesday’s Trading:

The S&P 500 Index fell 0.3%, while the tech-heavy Nasdaq 100 Index lost 170 points or 1.1% for the day.

The Dow Jones Industrial Average held steady, while small caps in the Russell 2000 had a timid 0.1% drop.

U.S. Indices’ Performance on Wednesday

The Utilities Select Sector SPDR Fund (NYSE:XLU) and the Consumer Staples Select Sector SPDR Fund (NYSE:XLP) increased by 0.6% and 0.5%, respectively, indicating sector rotation away from tech and growth.

Latest Economic Data:

The Mortgage Bankers Association reported a 0.5% increase in mortgage application volume for the week ended June 16, marking a significant slowdown from the prior week’s 7.2% gain.

The average contract interest rate on 30-year fixed-rate mortgages declined by 4 basis points to 6.73% in the week ending June 16, marking the third consecutive week of declines.

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Stocks In Focus:

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 2.4%, with a barrel of WTI-grade crude jumping to $72.50. The United States Oil Fund ETF (NYSE:USO) was 1.7% higher to $65 per share.  

Treasury yields slightly rose, with the 10-year yield down by 2 basis points to 3.74% and the two-year yield up by 2 basis points to 4.71%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 0.1% lower for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), down 0.4%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE:FXE), was 0.5% higher to 1.0972.

European stock indices closed slightly in the red. The SPDR DJ Euro STOXX 50 ETF  (NYSE:FEZ) was flat for the day. 

Staff writer Piero Cingari updated this report midday Wednesday. 

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