Major US stock indices declined on Wednesday following comments from a Federal Reserve official suggesting a possible interest rate increase later this year. The May ADP employment report showed a gain of 122,000 jobs, the largest increase since January of last year. Dallas Fed President Lorie Logan stated that policymakers might need to raise rates later this year to bring inflation back to the 2% target. Broadcom (AVGO.US) shares plummeted more than 12% in after-hours trading following its latest earnings release.
Market Performance Overview
At the close, the Dow Jones Industrial Average fell 620.72 points, or 1.21%, to 50,687.07. The Nasdaq Composite dropped 239.93 points, or 0.89%, to 26,853.98. The S&P 500 index declined by 55.1 points, or 0.74%, to 7,553.68. Among major tech stocks, Microsoft (MSFT.US) and NVIDIA (NVDA.US) both fell over 3%, while Oracle (ORCL.US) dropped more than 5%. Intel (INTC.US) shares gained 4%. The Nasdaq Golden Dragon China Index closed 2.46% lower, with Alibaba (BABA.US) down over 2%.
European and Currency Markets
In Europe, Germany's DAX 30 index fell 1.22% to 24,811.29, and Britain's FTSE 100 declined 0.41% to 10,331.42. France's CAC 40 index dropped 0.71% to 8,150.42. The U.S. Dollar Index, which measures the currency against a basket of six major peers, rose 0.31% to 99.529.
Commodity and Cryptocurrency Movements
Bitcoin briefly fell below $65,000, touching a low of $64,730.1, while Ethereum dropped below the $1,800 level to a low of $1,769.11. In the oil market, the July contract for West Texas Intermediate crude rose $2.26 to settle at $96.02 per barrel, a gain of 2.41%. The August contract for Brent crude increased by $1.81 to $97.81 per barrel, up 1.89%.
Key Economic Developments
The Federal Reserve's Beige Book reported that prices rose at a moderate to strong pace, with most districts noting inflation was higher than in the previous report. Energy costs related to Middle East conflicts were cited as a primary driver of inflation pressures, affecting areas like shipping, packaging, groceries, and fertilizer. The report noted uneven ability among firms to pass on higher costs, particularly for consumer-facing companies.
Dallas Fed President Lorie Logan reiterated her view that rate increases might be necessary later this year to fully restore price stability, expressing concern that current policy is not restrictive enough.
Notable Corporate Updates
Alphabet (GOOG.US) expanded its planned equity offering to $84.75 billion from $80 billion to fund its AI expenditures. The company priced its Class A and Class C share offerings, with net proceeds estimated at approximately $17.8 billion, intended for general corporate purposes including expanding AI infrastructure.
Meta Platforms (META.US) is launching a new phase of AI monetization by introducing AI agents for businesses on WhatsApp. The feature, which can automatically respond to customer messages, is being rolled out globally after testing in select markets and is expected to expand to Instagram's messaging system.
SpaceX has set a proposed IPO price of $135 per share in a filing, which would value the company at approximately $1.77 trillion. The company plans to issue 5.556 billion shares to raise about $75 billion, with a planned listing on the Nasdaq exchange.
AI startup Anthropic has reportedly selected Morgan Stanley and Goldman Sachs to lead its upcoming initial public offering, with JPMorgan also involved. The company is considering a listing as early as October and has confidentially filed for an IPO.
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