Stock Market News Today: Markets end mixed after Fed rate hike, Powell comments (SP500)
Wall Street's major averages on Wednesday ended with small moves while Treasury yields slid, as market participants digested the Federal Reserve's expected 25 basis point rate hike and post-decision comments from chief Jerome Powell.
Powell said that no decision had been made to hike rates at every other meeting. He followed up those remarks with a firm reiteration of the central bank's 2% inflation target and stressed that there would be no rate cuts this year.
The federal funds rate target range is now at its highest level in over two decades.
In the runup to the rate decision, market participants had digested plenty of quarterly reports from a host of Dow 30 components and tech titans Microsoft (MSFT) and Alphabet (GOOG) (GOOGL).
The Nasdaq Composite (COMP.IND) lost ground by 0.12% to close at 14,127.28 points. The benchmark S&P 500 (SP500) slipped marginally by 0.01% to end at 4,566.95 points. The Dow (DJI) eked out gains of 0.24% to settle at 35,447.00 points. Moreover, the blue-chip index achieved a significant milestone by notching its thirteenth straight day in the green to match its longest win-streak ever since January 1987.
The tech-heavy Nasdaq was dragged down by Microsoft (MSFT) and semiconductor bellwether Texas Instruments (TXN). The former retreated ~4% on concerns over its planned spending on artificial intelligence, while the latter declined more than 5% on demand and free cash flow worries.
The Dow was boosted by Boeing (BA). The top plane maker's shares surged ~9% after it reported a narrower loss and a healthy jump in revenue.
Of the 11 S&P sectors, five ended trading in the green, led by an outsized +2% increase in Communication Services. Technology and Materials topped the losers.
Treasury yields were lower after Powell's comments. The longer-end 10-year yield (US10Y) was down 4 basis points to 3.87%, while the more rate-sensitive 2-year yield (US2Y) was down 4 basis points to 4.85%.
Fed chair Powell in the press conference said that the central bank will continue to take rate decisions meeting by meeting, and has not decided on a path of raising at every other meeting. Powell also acknowledged that the slowdown in June consumer inflation was a positive.
However, later in the question-answer session, Powell said that the central bank was committed to bringing inflation down to its 2% target, and that he doesn't expect the monetary policy committee to cut rates this year.
"July 26th proved to be a very stable day for the market. Indexes remained mostly flat throughout the day even though the Federal Reserve announced that it was raising interest rates by another 0.25%. That takes the range for interest rates up to between 5.25% and 5%. This was largely priced in as market action illustrated," Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha. "It is interesting to note that while the Federal Reserve continues to guide toward another interest rate increase before the year is out, Chairman Jerome Powell left open the possibility that a further hike might not occur at the upcoming September meeting.
"In addition to this, there was some optimism from the organization as evidenced by the fact that they increased the economic growth picture from ‘modest’ to ‘moderate’. With inflation coming down, admittedly slower than what regulators would like, this stronger economic picture suggests that a soft landing is more probable than it might have been previously," Jones added.
Turning to Wednesday's economic calendar, 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.
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Source: Seeking Alpha
