(Adds close of U.S. markets)
* Equities waver, then fall on dovish Fed stance
* Long-term U.S. Treasury yields rise
* Oil gains as storm hits U.S. output, inventories drop
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog: LIVE/
By Herbert Lash
NEW YORK, Sept 16 (Reuters) - Global equities slid and the
dollar firmed on Wednesday after the Federal Reserve pledged to
hold interest rates near zero until at least 2023 and keep its
bond-buying program in place to stimulate the U.S. economy as
part of a dovish policy stance.
The S&P 500 and Nasdaq ended a choppy session lower as
losses in heavyweight technology names such as Amazon.com and
Apple weighed on the market and drove down MSCI's U.S.-centric
benchmark index for stock performance around the world.
Longer-term U.S. Treasury yields and gold prices edged
higher after the Fed promised to keep rates on hold until
inflation is on track to "moderately exceed" the U.S. central
bank's 2% inflation target "for some time." "They want to be dovish. They want to be super dovish. The
market is priced for dovish," said Nancy Davis, managing partner
and chief investment officer at Quadratic Capital Management LLC
in Greenwich, Connecticut.
"Nobody thinks there's going to be any kind of inflation at
all and the guidance is more dovish and in line with what the
market expected," Davis said, adding that she believes there is
a danger inflation could exceed expectations.
New economic projections released with the Fed's policy
statement showed rates on hold through at least 2023, with
inflation never breaching 2% over that time. Policymakers saw
the economy shrinking 3.7% this year, far less steep than the
6.5% decline forecast in June. Unemployment, which registered
8.4% in August, was seen falling to 7.6% by the end of the year.
Last month, the U.S. central bank adopted a new approach to
inflation and unemployment that will allow the economy to run a
little hotter than in the past to help ensure job growth for
lower-income earners.
Phil Orlando, chief equity strategist at Federated Investors
in New York, said short-covering or some other hedging may have
forced stocks lower at day's end, and the market could easily
bounce back by Friday.
"The market has this weird response mechanism around Fed
meetings all the time, regardless of who the chairman is," he
said. "I watched the press conference, I watched the Q&A; I
thought what (Fed Chair Jerome Powell) said was fine."
MSCI's benchmark for global equity markets .MIWD00000PUS
fell 0.17% to 574.65, while its emerging markets index .MSCIEF
rose 0.38%.
On Wall Street, the S&P 500 .SPX lost 15.71 points, or
0.46%, to 3,385.49 and the Nasdaq Composite .IXIC dropped
139.86 points, or 1.25%, to 11,050.47. The Dow Jones Industrial
Average .DJI closed up 36.78 points, or 0.13%, to 28,032.38.
In Europe, the broad FTSEurofirst 300 index .FTEU3 closed
up 0.49% at 1,446.16. London's FTSE 100 .FTSE lagged gains by
other European indices, down 0.44% at the close, but the
struggling pound was propped up by a weaker dollar. European retail stocks surged on strong results from
Zara-owner Inditex ITX.MC after it said there was a
progressive return to normality, with online sales growing
sharply and store sales recovering. Shares of the Spanish
retailer jumped 8.1%.
U.S. consumer spending slowed in August, with retail sales
excluding automobiles, gasoline, building materials and food
services sliding 0.1% after a downwardly revised 0.9% increase
in July.
Retail sales lost a little steam in August, but consumers
overall are still doing well despite modest weakness relative to
expectations, said Russell Price, chief economist at Ameriprise
Financial in Troy, Michigan.
When the pandemic slowed economic growth, consumers were in
a relatively strong financial condition, the direct opposite of
what is normally the case for an economic downturn, he said.
"Consumers are still overall doing well despite the modest
weakness relative to expectations," Price said.
The yen rose overnight and extended gains that hit a nearly
seven-week high of 104.995 to the dollar as investors sought
safer assets.
The dollar index =USD rose 0.052%, with the euro EUR=
down 0.36% to $1.1802.
The Japanese yen JPY= strengthened 0.41% versus the
greenback at 104.97 per dollar.
The 10-year U.S. Treasury US10YT=RR note rose 1.8 basis
points to 0.6969% after trading lower for much of the session.
U.S. gold futures GCv1 settled up 0.2% at $1,970.50 an
ounce. Spot gold prices XAU= rose 0.10% to $1,957.47 an ounce.
Oil prices rose for a second day, up more than 2%, as
Hurricane Sally closed U.S. offshore production and an industry
report showed U.S. crude inventories unexpectedly decreased.
Brent crude futures LCOc1 rose $1.69 to settle at $42.22 a
barrel, while U.S. crude futures CLc1 settled up $1.88 at
$40.16 a barrel.
Zinc prices pushed toward 16-month highs hit earlier this
month as resurgent Chinese industry bolstered the outlook for
demand and the yuan strengthened, making metals more affordable
for Chinese buyers.
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Emerging markets http://tmsnrt.rs/2ihRugV
World stocks https://tmsnrt.rs/2ZGEBBE
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