All three major stock indices in New York fell. The major indices showed strength following the U.S. Federal Open Market Committee (FOMC) results; however, concerns about inflation and the possibility of stagflation, along with ongoing uncertainty over tariffs, contributed to the decline.
On the 20th (Eastern Time), the Dow Jones Industrial Average closed down 11.31 points (0.03%) at 41,953.32 on the New York Stock Exchange (NYSE). The Standard & Poor's 500 Index closed at 5,662.89, down 12.4 points (0.22%), and the Nasdaq Composite Index ended at 17,691.63, down 59.16 points (0.33%).
Earlier, as concerns over Eurozone growth emerged, stock index futures plummeted, and the bearish trend persisted until the market opened.
Christine Lagarde, President of the European Central Bank (ECB), noted during a parliamentary hearing in Brussels, Belgium, that if the U.S. imposes a 25% tariff on European Union (EU) goods, Eurozone growth could drop by 0.3 percentage points in the first year. She further expressed concern that if the EU retaliates, the decline in growth could widen to 0.5 percentage points, adding that in the short term, European retaliation and the euro's depreciation could increase inflation by 0.5 percentage points.
Despite such concerns, stock indices that were rebounding on bargain hunting due to the FOMC results gave back all their gains before the afternoon session. The uncertainty over tariffs remains ahead of April 2, the date that former President Trump set for tariff implementation, and the FOMC outlook is not entirely optimistic.
The FOMC lowered its forecast for economic growth in its Summary of Economic Projections (SEP) for this year, while raising the inflation forecast. If this trend continues, it appears that both the Eurozone and the U.S. will not be free from fears of stagflation.
Sam Stovall, Chief Investment Strategist at CFRA Research, pointed out, "While the U.S. economy is not heading toward recession, we still do not know exactly what will happen due to tariffs."
Ben Snider, Chief Portfolio Strategist at Goldman Sachs, said, "The stock market is likely to struggle to rally in the next two weeks," adding that "the good news is that the market is already pricing in significant tariff increases around April 2 or shortly thereafter."
By sector, all sectors remained steady. Consumer discretionary, consumer staples, industrials, materials, real estate, telecommunications, and technology all declined. The group of seven major technology companies referred to as the 'Magnificent 7' showed mixed performance.
NVIDIA's Jensen Huang, Chief Executive Officer (CEO), commented on quantum computing, stating, "My first reaction was that I didn't know they had gone public (after my past comments caused a plunge in quantum computing stock prices)," and asked, "How could a quantum corporation go public?" On this day, the stock price of IonQ, a leading name in quantum computing, fell by over 9%.
Microchip Technology, a U.S. semiconductor corporation, saw its stock price drop by more than 6% after announcing plans to issue $1.35 billion in convertible bonds. Darden Restaurants, a multi-brand dining chain, released earnings that exceeded expectations for earnings per share (EPS) but fell short of market revenue expectations, resulting in a stock price increase of over 5%.
The CBOE Volatility Index (VIX) recorded a decline of 0.1 points (0.5%) to 19.8.