US stocks hold steady ahead of Fed rate decision
Summary
U.S. stocks edged higher in New York on Wednesday as investors awaited the Federal Reserve’s interest-rate announcement. The S&P 500 rose 0.2 percent, the Dow gained 149 points, and the Nasdaq was little changed. Wall Street widely expected the Fed to leave rates unchanged, while investors watched for clues about future decisions. Higher oil prices lifted Treasury yields, and SK Hynix’s earnings report helped boost AI-related stocks.
Key Facts
- The S&P 500 moved within 1 percent of its all-time high, set earlier in the month.
- The Fed raised its main interest rate the previous month for the first time in three years, aiming to slow high inflation.
- Fed Chairman Kevin Warsh has said since taking over that he wants the central bank to give fewer indications about future moves.
- The 10-year Treasury yield rose to 5.03 percent from 4.99 percent late Tuesday, while Brent crude climbed 2.7 percent to $112.39 a barrel.
- SK Hynix said it expected demand to outpace supply through 2030; its shares rose 10.9 percent in Seoul, while South Korea’s Kospi gained 6.6 percent.
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, Wednesday. Reuters-Yonhap
NEW YORK — U.S. stocks are drifting Wednesday as the countdown ticks toward this afternoon’s announcement from the Federal Reserve on what it will do with interest rates.
The S&P 500 rose 0.2 percent and pulled within 1 percent of its all-time high, which was set earlier this month. The Dow Jones Industrial Average was up 149 points, or 0.3 percent, as of 12:46 p.m. Eastern time, and the Nasdaq composite was mostly unchanged.
The day’s highlight will likely be what the Federal Reserve says, if anything, about where interest rates are heading. The Fed raised its main interest rate last month for the first time in three years in hopes of slowing the high inflation that’s squeezing the economy and discouraging Americans.
The widespread expectation on Wall Street is that the Fed will leave the federal funds rate alone at this meeting, and the question is whether it will give hints about what may happen at later meetings. Fed Chairman Kevin Warsh, though, has been adamant since taking over the Fed about wanting it to give fewer indications about its future moves.
Wall Street cares so much about interest rates because they are one of the main levers that set prices for stocks. The other big variable is how much profit companies are making, and several companies rallied Wednesday after joining the list of those beating analysts’ expectations for the summer.
GE HealthCare Technologies jumped 7.2 percent after delivering both profit and revenue for the summer that surpassed analysts’ expectations. It also raised its forecasts for revenue growth and other financial measures for the full year.
Etsy climbed 5.3 percent after its profit for the latest quarter blew past analysts’ forecasts. CEO Kruti Patel Goyal said the online marketplace saw growth in active buyers from prior-year levels for the first time in two years, while its active seller base grew at its fastest rate in two years.
Stocks in the artificial-intelligence industry were also relatively solid. They’ve stabilized this week following big swings on worries that high borrowing costs caused by high interest rates will undercut the boom in AI data centers largely built with borrowed money.
AI stocks got an additional boost after a major player in the industry, South Korea’s SK Hynix, soared 10.9 percent in Seoul following its latest profit report. The seller of memory chips said it’s in the midst of a virtuous cycle of rising AI usage, and it expects demand to continue to outpace supply through 2030.
On Wall Street, Micron Technology rose 4.7 percent and was the strongest force lifting the S&P 500. It also sells memory for computers.
Outside of tech and earnings, Wendy's soared 15.1 percent to $7.09 after Trian Fund Management, run by investor Nelson Peltz, offered to buy the chain for $7.35 per share in cash.
That helped offset a drop for Boston Scientific, which fell 5 percent even though the seller of medical devices reported a milder drop in profit for the latest quarter than analysts expected. It gave a forecast for profit in the current quarter that fell short of analysts’ expectations.
Robinhood Markets sank 4.2 percent after reporting weaker profit and revenue for the latest quarter than analysts expected.
In the bond market, Treasury yields ticked higher, and the yield on the 10-year Treasury rose to 5.03 percent from 4.99 percent late Tuesday.
It’s near the high end of its range since shooting upward from 3.97 percent when the war with Iran sent oil prices and worries about inflation much higher. But it’s pulled back after topping 5.30 percent earlier this month and touching its highest level since 2002.
Rising oil prices pushed upward on Treasury yields Wednesday as uncertainty continues about what will happen in the Middle East and the global energy industry. The price for a barrel of Brent crude, the international standard, climbed 2.7 percent to $112.39.
In stock markets abroad, South Korea’s Kospi jumped 6.6 percent following SK Hynix’s leap. Japan’s Nikkei 225 rose 1.1 percent, while France’s CAC 40 rose 0.1 percent.
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