LIVE MARKETS-US stocks stay put after Fed holds rates steady

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US STOCKS STAY PUT AFTER FED HOLDS RATES STEADY

The Federal Reserve held interest rates steady on Wednesday and projected higher inflation, steady unemployment and only a single rate cut for the year as officials took stock of economic risks from the U.S. and Israeli war on Iran.

New projections from U.S. central bank policymakers showed the Fed's benchmark overnight interest rate would fall by just a quarter of a percentage point by the end of this year, with no hint of the timing of such a move. That view was unchanged from previous projections and remains out of step with President Donald Trump's demand for a sharp drop in borrowing costs.

Based on interest rate probabilities, 23 basis points (bps) of cuts are now expected through year-end vs. 20.7 bps just before the statement hit the wires.

The S&P 500 index .SPX has barely budged. It's now down around 0.7% on the day, which is roughly flat with where it was just before the statement was released.

The U.S. 10-year Treasury yield US10YT=RR, which is now around 4.22%, is also essentially flat with where it was in the moments before the statement came out. The yield ended Tuesday at 4.202%.

Regarding the Fed's statement, Gennadiy Goldberg, head of U.S. rates strategy, NY, said:

“Yields are moving a little bit lower, I think just on relief that the dots for 2026 and 2027 didn't reflect fewer rate cuts as some investors were worried that they would. The statement itself just mentions uncertainty in the Middle East and the uncertainty in that pass through to the U.S. economy.”

Goldberg added, “Otherwise, I think the Fed is effectively staying on hold, just waiting and watching to see how this affects the economy. I think markets are going to be looking for Powell's remarks at 2:30 for any sort of direction, although I doubt Powell wants to pound the table one way or the other just because of the worry that the Middle East conflict can weigh on both growth and push inflation higher at the same time. And that's something that's concerning to the Fed.”

Here is a snapshot of where markets stood on the day around 2:15 p.m. EDT:

Investors now await Fed Chair Powell's press conference at 2:30 p.m. EDT.

(Terence Gabriel, Karen Brettell)

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