FM:CC - Stocks Warm to Fed Word
Stocks rallied Wednesday, rebounding from a dismal past three months, after the Federal Reserve kept interest rates unchanged for a second consecutive time — leading investors to think the central bank would stay put for the rest of the year.
The Dow Jones Industrials vaulted 221.71 points, to 33,274.58.
The S&P 500 index progressed 44.06 points, or 1.1%, to 4,237.86.
The NASDAQ surged 210.23 points, or 1.6%, to 13,061.47.
Information technology stocks outperformed, gaining more than 2%. Semiconductor companies Advanced Micro Devices leaped 9.7% and Micron Technology added 3.8%. Nvidia shares were higher by 3%.
The Fed kept rates in a range of 5.25% to 5.5%, as was widely expected. The central bank also said “economic activity expanded at a strong pace in the third quarter.” In previous remarks, it noted the economy was growing at a “solid pace.”
However, Fed Chair Jerome Powell at the post-decision press conference would not rule out a hike next month, saying that the idea that it would be difficult to raise rates after pausing for two meetings was wrong.
Private sector payrolls in October came in weaker than expected, the ADP said Wednesday. Companies added 113,000 workers last month, lower than the 130,000 anticipated by economists polled by Dow Jones.
Other economic data that came out Wednesday morning showed signs of cooling in the economy and labor market. The ISM manufacturing index showed manufacturing activity contracted more than expected in October. The Job Openings and Labor Turnover Survey showed that vacancies rose slightly in September. Private sector payrolls in October came in weaker than expected, the ADP said Wednesday.
Wall Street is coming off a dismal October. The Dow slid 1.4% to end the month, and the S&P 500 fell 2.2%, marking the first three-month losing streak for both indexes since March 2020. Notably, the S&P 500 temporarily fell into correction territory. The NASDAQ Composite dropped 2.8% in October, also falling for a third straight month.
Prices for the 10-year Treasury jumped, lowering yields to 4.76% from Tuesday's 4.92%. Treasury prices and yields move in opposite directions.
Oil prices sagged seven cents to $80.96 U.S. a barrel.
Gold prices dumped $7.20 to $1,987.10.