B-Share Blue-Chip Future Model 2026-06-21 11:11

US Stocks Fall: Dow Drops 500 Points as Fed Dot Plot Boosts Treasury Yields

Summary：US stocks fell Wednesday, with the Dow dropping about 500 points. Tech stocks led declines as Treasury yields surged. After new Fed Chair Warsh's first meeting, the dot plot hinted at a possible rate hike in 2026, triggering a repricing of monetary policy path.

US Stocks Fall: Dow Drops 500 Points as Fed Dot Plot Boosts Treasury Yields

On June 18 Beijing time, US stocks fell Wednesday, with the Dow dropping about 500 points. Major tech weights led declines, and Treasury yields surged. Several Fed officials hinted at a possible rate hike this year to curb inflation, causing uncertainty about the monetary policy path for investors.

The Dow fell 507.12 points, or 0.98%, to 51,492.55, after hitting a new intraday record high earlier in the session, marking its third consecutive record close; the Nasdaq fell 354.68 points, or 1.34%, to 26,021.65; the S&P 500 fell 91.25 points, or 1.21%, to 7,420.

Major tech weights led the decline, with Microsoft, Meta Platforms, Alphabet, and Amazon all closing lower. Hot IPO stock SpaceX also weighed on market sentiment, falling for the first time since its listing last Friday. Chip stocks such as Intel and Micron rose, helping to limit some of the broader market's losses.

This was the first Fed meeting chaired by new Chair Kevin Warsh. After the two-day meeting, the Fed kept interest rates unchanged in the target range of 3.5% to 3.75%.

According to the Summary of Economic Projections, several Fed officials expect a rate hike in 2026. The median year-end federal funds rate estimate is now 3.8%, up from 3.4% in the previous March forecast, suggesting the committee sees at least one rate hike needed in 2026.

Warsh revealed he did not submit a rate projection, complicating the outlook further.

US Treasury yields jumped after the decision, with the 2-year yield rising 16 basis points to 4.208%.

"The market reaction right now is mainly about the dot plot... its stance is much more hawkish," said Claudia Sahm, chief economist at New Century Advisors. "The inflation picture has changed a lot."

Traders also watched Warsh's emphasis on the Fed's commitment to "price stability" several times during the press conference, suggesting he may not be as willing to cut rates as many expected from a Trump appointee.

Jeffrey Gundlach, CEO of DoubleLine Capital, said: "He's absolutely telling you he plans to achieve price stability. That means... we won't get the loose monetary policy that might have been expected under Chair Warsh when everyone was betting on rate cuts earlier this year. He didn't sound anything like that today."

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