Wall Street is steady after the Federal Reserve announced it will keep interest rates on hold.
It was a widely expected move, with the central bank opting to delay any changes to borrowing costs until after next week’s US midterm elections and awaiting further data on the path of inflation.
The S&P 500 rose 0.2 per cent and pulled within 1 per cent of its all-time high, which was set earlier this month. The Dow Jones Industrial Average was up 149 points, or 0.3 per cent, in mid-afternoon trade and the Nasdaq composite was mostly unchanged.
The Australian sharemarket is set to climb, with futures at 5.05am AEDT pointing to a rise of 24 points, or 0.3 per cent, at the open. The ASX closed flat on Wednesday. The Australian dollar was trading at US70.35¢.
In a 10-2 decision, the Fed said it would maintain its benchmark interest rate within the current 3.75 per cent-4.00 per cent range while acknowledging that inflation “remains elevated,” upgrading its assessment of the economy, and hinting that further rate hikes may be coming depending on the performance of inflation.
“The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 per cent goal,” the rate-setting Federal Open Market Committee said in its latest policy statement. “The Committee will deliver price stability.”
Fed Governor Lisa Cook, currently targeted by President Donald Trump for removal from the central bank, dissented in favour of a quarter-percentage-point rate hike, as did Cleveland Fed President Beth Hammack, a consistently hawkish voice who also dissented in July for the same reason
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 will speak at 5.30am AEDT, but 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 per cent 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 per cent 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 stabilised this week following big swings on worries that high borrowing costs caused by high interest rates will undercut the boom in AI data centres 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 per cent 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 per cent 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 per cent to $US7.09 after Trian Fund Management, run by investor Nelson Peltz, offered to buy the chain for $US7.35 per share in cash.
That helped offset a drop for Boston Scientific, which fell 5 per cent 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 per cent 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 per cent from 4.99 per cent late Tuesday.
It’s near the high end of its range since shooting upward from 3.97 per cent when the war with Iran sent oil prices and worries about inflation much higher. But it’s pulled back after topping 5.30 per cent 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 per cent to $US112.39.
In stock markets abroad, South Korea’s Kospi jumped 6.6 per cent following SK Hynix’s leap. Japan’s Nikkei 225 rose 1.1 per cent, while France’s CAC 40 rose 0.1 per cent.
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