Wall Street ended sharply lower on Wednesday after the Federal Reserve held US interest rates steady and projected only a single rate cut for the year as officials took stock of economic risks from surging oil prices and the US and Israeli war with Iran.

New projections from US central bank policymakers showed the Fed's benchmark overnight interest rate would fall by just a quarter of a percentage point by the end of this year, with no hint of timing.

Major stock indexes extended declines after Fed Chair Jerome Powell held a news conference and reiterated the uncertainty the war creates for the economic outlook. Economists had not expected the Fed to change its interest rate.

"The Fed is on hold. With inflation running above target and the economy running above trend, and elevated uncertainty about the path of the Iran war, there is no argument for easing policy," said Michael Rosen, chief investment officer at Angeles Investments in Santa Monica, California.

"The bigger challenge for the Fed, exacerbated by the war, is balancing its dual mandate of full employment and low, stable inflation. Should the war persist and oil prices remain high, ⁠it will cause economic slowing. But easing monetary policy would be a mistake as that would only fuel inflation."

Earlier, the US Labour Department said the Producer Price Index rose 3.4 percent year-on-year, exceeding economists' 2.9 percent forecast, with prices at risk ⁠of accelerating further as the Middle East conflict lifts shipping and oil costs.

Brent crude extended gains and reached near US$110 a barrel at one point after some facilities belonging to Iran's oil industry in South Pars and Asaluyeh were attacked.

The S&P 500 declined 1.4 percent to end the session at 6,624 points, its lowest close in nearly four months. The Nasdaq declined 1.5 percent to 22,152, while the Dow Jones Industrial Average declined 1.6 percent to 46,225 points.

AMD gained 1.6 percent after agreeing with Samsung Electronics to expand their strategic partnership on memory chip supplies for AI infrastructure. Nvidia dipped 0.8 percent after securing Beijing's approval to sell its second-most-powerful artificial intelligence chips in China. Micron Technology tumbled 4.3 percent in extended trade after the memory chipmaker projected quarterly sales above Wall Street expectations and said it was boosting its fiscal 2026 capital expenditure plans.

Asset manager Apollo Global Management rose 2.1 percent, rebounding from sharp losses in the previous week on private credit quality concerns. Lululemon surged 3.8 percent after the yoga-wear maker's quarterly results. (Reuters)



Edited by Cecil Wong