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S&P 500 closes higher, led by tech, as Fed Chair Powell points to possible September rate cut
Today’s Stock Market Activity: Winners and Losers
Stocks rallied Wednesday after the Federal Reserve kept interest rates unchanged, as expected, while highlighting inroads against inflation. Traders also poured back into megacap tech as chip names soared.
The S&P 500 jumped nearly 1.5%, while the Nasdaq Composite popped about 2.4%. The Dow Jones Industrial Average added 92 points, or 0.2%. At session highs, the Dow was up 455.30 points, or 1.1%. The S&P 500 and Nasdaq were up as much as 2.1% and 3.2%, respectively, before paring those gains.
During Fed Chair Jerome Powell’s press conference Wednesday afternoon, he said that if data continues to give the central bank confidence that inflation is slowing, it could be ready to move.
“If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” Powell said.
The Federal Open Market Committee struck a slightly more optimistic tone in its post-meeting statement, saying that in recent months, further progress has been made towards bringing inflation down closer to the central bank’s 2% target.
“The Fed used today’s statement to prepare markets for upcoming rate cuts. As inflation rates improve and unemployment increases, the Fed can cut rates yet keep the nominal funds rate above the inflation rate,” LPL chief economist Jeffrey Roach said in a note. “Markets will likely respond favorably to the subtle shift in tone.”
Jobs data released earlier Wednesday also hinted at a slowing economy and supported central bankers’ efforts to reduce inflation. Private job growth slowed further in July as the pace of wage gains dropped to a three-year low, according to the latest ADP report.
Mega cap tech names made a comeback during Wednesday’s trading session. Nvidia shares gained about 12.5%, clawing back some of this month’s losses as the stock headed for its best day since February 22. The chipmaker soared as better-than-expected results from rival Advanced Micro Devices stoked optimism in the semiconductor space. Other tech stocks such as Apple, Meta Platforms and Amazon were also higher. Microsoft, however, pulled back 1% on disappointing quarterly cloud revenue.
Boeing added 2.4% after announcing a new CEO. The aerospace company also reported a wider-than-expected loss and disappointing revenue for the second quarter. Humana, meanwhile, slid 10.5% after posting weak guidance.
Russell 2000 briefly touches 2,300 level after Fed announcement
The Russell 2000 briefly touched 2,300 level on Wednesday afternoon. The small-cap index is still on track for a gain of more than 1% despite dipping from that high water mark.
(CNBC)