US Stock Market: Wall Street Stocks Retreat S&P 500 And Nasdaq Close Lower Following Fed Rate Decision- Check Details (image source: Canva)
US stocks closed with a mixed performance on Wednesday following the Federal Reserve’s decision to keep its key interest rate unchanged, as widely anticipated. The central bank indicated a potential rate cut in the future but expressed uncertainty regarding sustained progress on inflation.
US Stock Market Indices Performance
The Dow Jones Industrial Average saw a slight gain, while the S&P 500 and the Nasdaq ended the session lower. The Dow Jones Industrial Average climbed by 87.37 points, or 0.23 per cent, reaching 37,903.29. Meanwhile, the S&P 500 experienced a decline of 17.3 points, or 0.34 per cent, closing at 5,018.39, and the Nasdaq Composite dropped by 52.34 points, or 0.33 per cent, settling at 15,605.48.
Fed’s Decision and Uncertainty
The Federal Open Markets Committee (FOMC) concluded its two-day meeting with a unanimous decision to maintain the Fed funds target rate at 5.25 per cent-5.50 per cent. However, the accompanying statement did not provide clarity on the timing of any potential rate cut. Fed officials emphasized ongoing concerns about the persistence of inflation, which hasn’t significantly bolstered confidence despite progress in the initial months of 2024.
During the subsequent press conference, Fed Chair Jerome Powell reaffirmed the central bank’s commitment to bringing inflation back to its 2 per cent target. He acknowledged progress toward that goal but dismissed the possibility of an imminent rate hike.
Market Reaction and Analyst Insights
“PHDCCI appreciates the status quo stance of the federal reserve rate at 5.25 per cent-5.50 per cent. Expanding economic activity, and stable job growth accompanied by easing but elevated inflation are showing signs of strong recovery of the US economy,” said Sanjeev Agrawal, President, PHDCCI
We are hopeful that the inflation trajectory in India will stabilise around 4-4.5 per cent in the coming months and create a scope for a repo rate cut. Going ahead, at the back of the current dynamics of the global economy, this is the time to remain watchful and act with caution, said Agrawal.
As the first-quarter reporting season progresses, 310 companies in the S&P 500 have reported their earnings, with 77 per cent beating consensus estimates. Analysts now expect aggregate first-quarter S&P 500 earnings growth of 6.6 per cent year-on-year, a notable improvement from earlier estimates.
Momentum Stocks
Several companies experienced significant stock price movements. Advanced Micro Devices and Super Micro Computer saw declines due to disappointing forecasts and revenue misses, respectively. Conversely, Amazon.com and Johnson & Johnson recorded gains on better-than-expected quarterly results and settlement announcements.
Starbucks reported reduced sales forecasts and a decline in same-store sales, leading to a notable drop in its stock price. Similarly, CVS Health’s earnings fell short of estimates, causing a significant decline in its shares.
The Dow Jones Industrial Average rose slightly, while the S&P 500 and the Nasdaq experienced losses. Energy shares recorded the largest percentage loss among the 11 major sectors in the S&P 500, while utilities led the gainers.
