Wall Street's excitement over a potential pause in the Federal Reserve's aggressive tightening campaign was insufficient to sustain the stock rally, with Jerome Powell dismissing hopes for interest-rate cuts for the time being.
Swap contracts have continued to imply that monetary policy will be significantly eased before the end of 2023. Treasury two-year yields fell as much as 12 basis points to around 3.85%, while the dollar fell for the second time in a row.
Following the usual back-and-forth of Fed days, the S&P 500 erased a rally that approached 1% at one point, finishing near session lows.
The Federal Reserve raised interest rates by a quarter-point on Wednesday, to a target range of 5% to 5.25%, the highest level since 2007. The vote was unanimous, and the Federal Open Market Committee removed a line from its previous statement from March in which it stated that it "anticipates that some additional policy firming may be appropriate."