At the end of its most recent policy meeting, the Federal Reserve decided to keep interest rates at their highest level in 22 years, and investors speculated that the central bank could be done raising rates. This decision caused US equities to soar on Wednesday.
Over 1% of the S&P 500 (\GSPC) and nearly 0.7% of the Dow Jones Industrial Average (\DJI) saw gains. In the meantime, the tech-heavy Nasdaq (^IXIC) rose 1.6% to lead gains.
The Federal Reserve maintained stable interest rates in the range of 5.25% to 5.50% while it watches how the US economy responds to its vigorous programme of credit tightening.
Powell said that the Summary of Economic Projections is “not a promise” in response to a question concerning the central bank’s earlier prediction that there will be one more rate increase this year.
The 10-year yield (\TNX) is now trading below 4.8%, as Treasury rates continued to decline. In keeping with Wall Street’s expectations, the US Treasury announced in its quarterly refunding report that it will auction $112 billion of debt next week, which caused yields to slightly decline early on Wednesday.
Since the August update had a part in the recent increase in rates, stock investors were paying more attention to the statement than normal.
The revelation caused a change in bets on potential rate rises. Investors have priced in a 73% likelihood that the Fed maintains rates at current levels until its January meeting, according to the CME FedWatch Tool. Just a 59% probability that rates would remain unchanged through that meeting was priced in by the markets the day before.
At the end of its most recent policy meeting, the Federal Reserve decided to keep interest rates at their highest level in 22 years, and investors speculated that the central bank could be done raising rates. This decision caused US equities to soar on Wednesday.
Over 1% of the S&P 500 (\GSPC) and nearly 0.7% of the Dow Jones Industrial Average (\DJI) saw gains. In the meantime, advances on the tech-heavy Nasdaq (^IXIC) led a 1.6% surge.
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The Federal Reserve maintained stable interest rates in the range of 5.25% to 5.50% while it watches how the US economy responds to its vigorous programme of credit tightening.Powell stated that the Summary of Economic Projections is “not a promise or plan” in response to a question concerning the Central Bank’s earlier prediction of one more rate rise this year.
The Federal Reserve published its most recent Summary of Economic Projections in September. Included in this document is the “dot plot,” which illustrates the policymakers’ projected future path for interest rates.
The dot plot indicated that the central bank would raise rates one more time this year, which caused markets to plunge and yields to soar.
Yet, Fed Chair Jerome Powell was reticent when questioned directly on Wednesday about that prediction and if it implies an increase would occur in December.
Powell advised “considering the multitude of factors that might alter your perspective” since the Fed last updated its forecast over a month ago. He clarified that the dot plot is “not a plan or a promise of the future.”
Following the release of quarterly results that exceeded Wall Street’s projections for both sales and profits per share, AMD (AMD) shares topped Yahoo Finance’s hot tickers page. As the business predicted yearly revenues of more than $2 billion, the stock increased by more than 8%.
Following the company’s guidance for weaker revenues than the Street had anticipated, Paycom (PAYC) shares plunged more than 30% on Wednesday. Paycom’s fourth-quarter revenue is now expected to be between $420 million and $425 million, less than their initial projection of $452 million.
Following the company’s release of earnings and sales outlook that was well below Street projections, Estée Lauder (EL) shares came under pressure. The business expects earnings per share for the upcoming quarter to be between $0.48 and $0.58, which is less than the Street average.
Wall Street was mostly expecting the US Treasury’s quarterly refunding statement, which was made on Wednesday. The Treasury will auction off $112 billion in debt next week, falling short of the $114 billion that the market had anticipated.
Investors who were concerned that higher-than-expected bond issuance wouldn’t be met with adequate demand and that Treasury rates would continue to rise as a result welcomed the announcement. However, the news on Wednesday caused rates to drop; now, the 10-year yield (^TNX) is trading at 4.8%.
On X, previously known as Twitter, Joseph Brusuelas, principal and chief economist at RSM US, stated that the market can and will process this additional supply of bonds “without causing a surge in long-term rates.”
The US labour market is still showing signals of a tight labour market, and there are further indications that pay increases from the epidemic are disappearing.
According to ADP’s confidential payroll data, which was made public on Wednesday, pay growth in October fell to its lowest point in two years. In the meanwhile, rewards for changing jobs are decreasing as well.
October’s pay rise for job changers dropped to 8.4%, the lowest annual gain since July 2021. This occurred while, in general, the ADP employment report revealed that, compared to Wall Street’s projections of 150,000 new private payroll positions in October, just 113,000 new jobs were added.
October witnessed a divergence in the fortunes of the “Magnificent Seven” tech titans that had been leading the 2023 stock market surge due to a combination of factors like as investor weariness, industry narratives, and earnings.
Steve Sosnick, chief strategist at Interactive Brokers, stated on Yahoo Finance Live on Tuesday that it is not possible to see the equities as a group of seven at this time.
The only two companies in the group to report increases of more than 1% last month were Amazon (AMZN) and Microsoft (MSFT), with the titans based in the Seattle region surging 4.7% and 7.1%, respectively. Both businesses released quarterly statistics that showed their cloud segments were growing faster than investors had anticipated.
Competitor Alphabet’s (GOOG, GOOGL) shares fell more than 5% on disappointing cloud business results, and Nvidia’s (NVDA) fell 6% on rumours that the Biden administration may restrict AI chip sales to China.
When Tesla’s (TSLA) most recent earnings revealed lower-than-expected profitability amid general concerns about the rate of EV adoption, the company’s shares dropped by about 20%.
Meta Platforms (META) had a 0.4% increase in stock price at the end of the month despite the company’s fourth-quarter outlook being lower than anticipated. Following a more than 8% decline in September, Apple (AAPL) shares had a similarly dismal month, down 0.3%. The creator of the iPhone is scheduled to release its results on Thursday.