NEW YORK: Wall Street’s major indices closed higher on Wednesday (Nov 1) with the Nasdaq’s 1.6% advance leading gains, after the US Federal Reserve (Fed) kept interest rates unchanged
and comments from its top official fuelled investor optimism rate increases were done even though the central bank left the door open for more.
The Dow Jones Industrial Average rose 221.71 points, or 0.67%, to 33,274.58, the S&P 500 gained 44.06 points, or 1.05%, to 4,237.86 and the Nasdaq Composite added 210.23 points, or 1.64%, to 13,061.47.
Fed chair Jerome Powell said policy makers would proceed carefully although they were not yet confident financial conditions were restrictive enough to get inflation as low as the central bank would like.
Trading was choppy at the start of Powell’s press conference but the major equity indices started to regain lost ground after about 20 minutes, then went on to hit session highs.
This was because the Fed’s top official “was not as assertive about higher-for-longer” rates as he has been in past press conferences, according to Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Charlie Ripley, senior investment strategist for Allianz Investment Management, wrote that while there is still a potential risk for the Fed to raise rates again, Powell’s commentary suggests that “the bar has become higher for rate hikes.”
Edward Moya, senior market analyst at Oanda, wrote that while Powell insisted he was keeping options open for a hike “he didn’t seem very convincing”.
Among the S&P 500’s 11 major sectors only two lost ground with energy falling 0.3% while consumer staples edged down 0.06%. Top gainers were rate sensitive information technology, which rose 2% and communications services, which rose 1.8%.
In individual stocks, shares of Advanced Micro Devices jumped almost 10% after an upbeat forecast for sales of chips for artificial intelligence signalled progress in its bid to catch up with market leader Nvidia.
Earlier, the stock market was boosted from falling bond yields after the US Treasury Department said it will slow the pace of increases in its longer-dated debt auctions in the November-January quarter and expects it will need one more additional quarter of increases after this to meet its financing needs.
Earnings season has been a mixed bag for stocks even though 79.7% of the 310 S&P 500 companies that had reported at the time of LSEG’s latest update beat analyst expectations for the quarter while only 16.1% had fallen short of estimates.
Still investors were disappointed by many quarterly updates.
Estee Lauder shares tumbled 18.9% after the beauty products maker cut its annual profit outlook. And shares in Payroll processor Paycom Software sank 38.5% after it projected for downbeat fourth-quarter revenue.
Tinder owner Match Group dropped 15.3% after it also forecast fourth-quarter revenue below estimates. – Reuters