Dow Jones Futures Fall After Hawkish Fed Sends Stocks Tumbling Below Key Levels

Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures, as Treasury yields rose.

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The stock market retreated after the Federal Reserve meeting, with the S&P 500 and Nasdaq breaking below critical levels. The Fed stuck with forecasts for one more rate hike this year and indicated that rates would stay higher for longer. However, Fed chief Jerome Powell said the central bank will “proceed carefully.”

Nvidia (NVDA), Google parent Alphabet (GOOGL), Meta Platforms (META) and Tesla (TSLA) retreated. Those Magnificent Seven members are among the biggest S&P 500 winners in 2023.

Meanwhile, Celsius (CELH), one of the last stalwart leaders, sold off hard Wednesday. ELF Beauty (ELF) fell for a ninth straight session.

Investors should be looking to curb exposure and wait for real market strength before making new buys.

Nvidia stock, Meta, Tesla and Celsius are all IBD Leaderboard stocks. Tesla, Celsius and Meta stock are on the IBD 50. CELH stock and Tesla are on the IBD Big Cap 20.

FedEx (FDX) and KB Home (KBH) reported after the close.

Fed Meeting

Policymakers left interest rates steady at a 5.25%-5.5% range at the end of the two-day Fed meeting, as expected. The focus was on the Fed rate-hike outlook for the rest of the year and 2024. Twelve FOMC members still expect one more rate hike in 2023, the same as in June, vs. seven who see no change.

Fed chief Powell said policymakers can “proceed carefully,” suggesting no hurry to raise rates again. But he also said one more Fed rate hike wouldn’t be a big deal for the economy.

For 2024, policymakers now expect the fed funds rate to end at 5.1%, vs. the June forecast for 4.6%.

What’s going on? The Fed is feeling more confident in a soft landing, reducing the downside risk of another hike and keeping rates elevated. GDP is seen rising 2.1% in 2023 and 1.5% next year, both up from June estimates of 1% and 1.1%, respectively. Unemployment should end the year at 3.8% and only creep up to 4.1% in 2024, both lower than June projections.

Meanwhile, the Federal Reserve now sees the core…

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