The Spanish IBEX 35 stock index retreated further from the nine-month highs it reached at the beginning of June, following a Fed meeting that resulted in a substantial cooling of the outlook for interest rate cuts.

Despite the fact that hours earlier a more moderate inflation figure than expected was released, the leaders of the US Federal Reserve (Fed) published an update of their monetary forecasts that only contemplates a cut of a quarter of a percentage point this year, postponing until December the first monetary easing movement.

This is a notable moderation in the expectations that had been handled until now, since at the Fed's previous meeting its officials had expected three rate cuts in 2024, while at the beginning of the year a first decrease in the cost of borrowing was expected in March.

In any case, the markets did not show an excessively negative reaction to these developments, choosing to focus on the strength of the US economy - which benefits companies - and on the fact that interest rates will come down sooner or later.

"This revision to the dot plot may not be taking into account yesterday's good May inflation data. In any case, what it really means is a temporary delay in the downgrade, as the Fed raises from 3 to 4 the rate cuts planned for 2025," said the Renta 4 brokerage house.

Even so, these analysts emphasize that "it is true that the long-term interest rate goes back up slightly to 2.8% (from 2.6% in March and 2.5% previously), reiterating the idea of high rates for longer in a context in which the Fed revises upwards its inflation forecasts (...) and in which the labor market, despite some moderation, continues to show strong job creation".

While the market digests the new outlook from the US central bank, Thursday's session will bring the weekly unemployment indicator and producer prices in the US, which could show an increase from 2.2% to 2.5% year-on-year.

Earlier, at 1100 GMT, Eurozone industrial production will be released, which according to a Reuters poll will show a year-on-year decline of 1.9% in April.

In this context, at 07:05 GMT on Thursday, the Spanish selective stock market index IBEX 35 fell 22.30 points, or 0.20%, to 11,223.10 points, while the FTSE Eurofirst 300 index of large European stocks fell 0.23%.

Telefónica fell by 1.42% after suffering a cut in Deutsche Bank's recommendation.

Among the other large non-financial stocks, Inditex advanced 0.26%, Iberdrola gained 0.08%, Cellnex fell 0.24%, and the oil company Repsol rose 0.10%.

In the banking sector, Santander lost 0.11%, BBVA fell 0.39%, Caixabank dropped 0.12%, Sabadell fell 0.27%, Bankinter dropped 0.18%, and Unicaja Banco lost 0.31%.

(Information by Tomás Cobos; edited by Javi West Larrañaga)