LIVE MARKETS-S&P 500 adds to losses as Fed holds rates steady

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S&P 500 ADDS TO LOSSES AS FED HOLDS RATES STEADY

The Federal Reserve held interest rates steady on Wednesday and gave little insight into when further reductions in borrowing costs may take place in an economy where inflation remains above target, growth continues, and the unemployment rate is low.

After several months in which inflation data have largely moved sideways, the U.S. central bank dropped from its latest policy statement language saying that inflation "has made progress" towards the Fed's 2% inflation goal, noting only that the pace of price increases "remains elevated."

According to the CME's FedWatch Tool, the probability that the Fed leaves rates unchanged at its March 18-19 meeting is now around 74% vs about 72% just before the FOMC statement was released at 2 p.m. ET. There is around a 26% chance the Fed reduces rates at that meeting by 25 basis points.

The market is still showing a bias for the Fed to lower rates to the 4.00%-4.25% area in June vs the current target rate of 4.25%-4.50%. There is also a slight bias for another 25 basis point cut to occur in December.

The S&P 500 index .SPX is now down around 0.8% on the day vs a loss of around 0.5% just before the statement came out.

All S&P 500 sectors have weakened slightly over this short period with real estate .SPLRCR taking the biggest hit. Communication services .SPLRCL has edged just slightly lower over the past 15 minutes or so.

The U.S. 10-year Treasury yield US10YT=RR is now around 4.58% vs around 4.56% just before the statement was released. The yield ended at 4.549% on Tuesday.

Regarding the statement, Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said:

"The Fed seems to think the economy is stuck with a low unemployment rate and elevated inflation."

Jacobsen added, "The statement could be read to be mildly hawkish, suggesting that a little jolt to rates could kick the economy out of this equilibrium."

Investors now await Fed Chair Powell's press conference at 2:30 pm ET.

Here is a snapshot of where markets stood around 2:15 pm ET:

(Terence Gabriel, Chuck Mikolajczak)

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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:

EXPECT VOLATILITY, AND ADJUST ACCORDINGLY - CLICK HERE

MORTGAGE DEMAND DIPS AS RATES STAY ELEVATED, GOODS TRADE GAP AT WIDEST SINCE MARCH 2022 - CLICK HERE

GLOBAL TECH ROUT A CORRECTION, NOT A BEAR MARKET, GOLDMAN SACHS SAYS - CLICK HERE

U.S. STOCKS SUBDUED IN EARLY TRADE AHEAD OF FED, BIG EARNINGS - CLICK HERE

BENCHMARK TREASURY YIELD ON THE BACK FOOT AHEAD OF THE FED - CLICK HERE

US STOCK ROTATION OR RECESSION? IT MATTERS FOR THE DOLLAR - CLICK HERE

IN FAVOUR OF A HIGHER US NEUTRAL RATE - CLICK HERE

EURO AREA GROWTH: ITALIAN EXCEPTIONALISM IS OVER - BOFA - CLICK HERE

TECH STRIKES BACK, LUXURY GOES BACK - CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES RISE, ASML POPS - CLICK HERE

TECH NERVES SETTLE JUST IN TIME FOR MAG 7 EARNINGS - CLICK HERE