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U.S. stocks on Wednesday were little changed, after the Federal Reserve hiked interest rates by 25 basis points as widely expected. Investors are now awaiting chief Jerome Powell’s upcoming press conference.
Market participants digested plenty of quarterly reports ahead of the rate decision, with a host of Dow 30 components and tech titans Microsoft (MSFT) and Alphabet (GOOG) (GOOGL) announcing their numbers.
Minutes after the Fed’s meeting outcome, the Nasdaq Composite (COMP.IND) was down 0.41% to 14,087.16 points, while the benchmark S&P 500 (SP500) was lower by 0.23% to 4,557.13 points. The Dow (DJI) was up 0.05% to 35,457.00 points.
The tech-heavy Nasdaq has been dragged down by Microsoft (MSFT) and semiconductor bellwether Texas Instruments (TXN). The former retreated ~4.5% on concerns over its planned spending on artificial intelligence, while the latter declined nearly 6% on demand and free cash flow worries.
The blue-chip Dow has been boosted by Boeing (BA). The top planemaker’s shares surged ~7% after it reported a narrower loss and a healthy jump in revenue.
Of the 11 S&P sectors, five were trading in the green, led by an outsized +2% increase in Communication Services. Technology and Materials topped the losers.
Treasury yields showed little reaction after the rate decision. The longer-end 10-year yield (US10Y) was down 2 basis points to 3.89%, while the more rate-sensitive 2-year yield (US2Y) was flat at 4.89%.
Among early reactions to the Fed decision, economist Justin Wolfers tweeted: “Fed Day, summarized: We did what we said we would do and we’re not telling you what we’ll do next because we don’t know yet.”
With today’s 25 basis point hike already baked into the markets, the more important question is whether this will be the final rate increase in what has been the central bank’s most aggressive tightening campaign in decades. Traders will be keenly watching the post-decision press conference for clues from chair Powell on the future of monetary policy.
According to the CME FedWatch tool, markets mostly expect the Fed to hold rates steady the rest of this year after today’s 25 basis point hike. Chances of a rate cut have been pushed out until March.
Economic data on Tuesday had showed a surge in consumer confidence to its highest levels since July 2021. That could keep the pressure on the Fed to remain hawkish.
Wednesday’s economic calendar showed that State Street’s reading of global investor confidence rose in July from June. Meanwhile, July’s survey of business uncertainty over revenue growth remained higher than pre-pandemic levels. Finally, June new home sales came in at 697K, lower than the anticipated 725K figure.
Among other earnings related moves, Alphabet (GOOG) (GOOGL) shares surged to a 15-month high after the Google-parent’s quarterly results showed modest but steady growth on the back of advertising revenues of nearly $60B.
Visa (V) stock fell 1.5%, despite the card issuer posting a top and bottom line beat on robust consumer spending and a continued recovery in travel. Fellow Dow 30 component Coca-Cola (KO) rose after smashing organic revenue expectations.
Union Pacific (UNP) was the top percentage gainer on the S&P 500 (SP500) after the railroad operator named former chief operating officer Jim Vena as its new CEO.
