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* Fed sees growth contracting by 6.5% this year (Updates to close)
By Caroline Valetkevitch
June 10 (Reuters) - The Dow and S&P 500 ended a choppy session lower on Wednesday after the Federal Reserve reassured investors of its support for the economy but projected a 6.5% decline in gross domestic product this year.
In its latest policy statement, the Fed also forecast a 9.3% unemployment rate at year’s end, and officials saw the key overnight interest rate, or federal funds rate, remaining near zero through at least 2022.
The S&P 500 and Dow both moved between gains and losses after the statement, which included the Fed’s first projections on the economy since the coronavirus outbreak, and following comments from Fed Chairman Jerome Powell.
“You may think about what you expected the Fed to say and do but then you might put a finer pencil to what the implications are. Clearly the implications are that rates are pegged at zero for a long time,” said Tom Martin, senior portfolio manager at Globalt in Atlanta.
“The projections for GDP and for unemployment are that it’s going to improve slowly from here, but it still takes a while to get back. And that’s a reality that takes a while to sink in, that it takes a while to back to where you were.”
Unofficially, the Dow Jones Industrial Average fell 282.86 points, or 1.04%, to 26,989.44, the S&P 500 lost 17.12 points, or 0.53%, to 3,190.06 and the Nasdaq Composite added 66.59 points, or 0.67%, to 10,020.35.
Bank shares, which tend to benefit from rising rates, fell sharply. The S&P 500 was off as much as 0.8% before the Fed statement. The Fed’s pledge to keep monetary policy loose until the U.S. economy is back on track repeats a promise made early in the central bank’s response to the coronavirus pandemic.
Shares of Eli Lilly and Co LLY.N rose after its chief scientist told Reuters that it could have a drug specifically designed to treat COVID-19 authorized for use as early as September if all goes well with either of two antibody therapies it is testing. (Reporting by Caroline Valetkevitch; additional reporting by Stephen Culp; Editing by Cynthia Osterman)