Shares win after Fed leaves interest rates unchanged at zero, and Powell vows to continue support during the pandemic
Shares rose higher on Wednesday afternoon after the Federal Reserve left benchmark interest rates unchanged at zero and Fed Chair Powell reiterated its commitment to provide support until the corona virus threat to the U.S. economy is over.
Market participants also turned into Capitol Hill hearings, as top executives from the world’s most powerful technology companies testify during what is likely to be a controversial panel. Wrangling over coronavirus aid and a wave of blue-chip corporate earnings also took investment sentiment into account.
See: Big Tech’s latest reckoning is coming as it continues to record records
What do the main benchmarks do?
The Dow Jones Industrial Average US: DJIA
rose 176 points, or 0.7%, to 26,559, while the blue-chip benchmark lagged other stock indices, with the S&P 500 US: SPX
at the last check 42 points, or 1.3%, to 3,260. The Nasdaq Composite US: COMP
rose 145 points, or 1.4%, to about 10.547.
The Dow fell 205.49 points, or 0.8%, to close at 26,379.28 on Tuesday, while the S&P 500 lost 20.91 points or 0.7%, ending at 3,218.44. The Nasdaq closed at 10,402.09, down 134.18 points or 1.3%. Total compound volume on Tuesday was 9,334,655,074 shares, the lowest since February 20, according to Dow Jones Market Data.
What drives the market?
Equities applauded the Federal Reserve’s decision to leave reference rates unchanged at close to zero on Wednesday, while chairman Jerome Powell once again pledged to provide stimulus until the economy has proven that it has survived the pandemic.
Powell pointed out that households and the job market have improved slightly since May when the nation made progress against the biggest shock to the US economy “in living memory,” but also warned that rising coronavirus cases are now accelerating in many states threaten recovery.
“Tax policy is essential here,” Powell said at an afternoon press conference, saying the Fed had no intention of curbing its slate of emergency loans to maintain credit flow, but also pushed members of Congress to provide additional coronavirus assistance to offer.
“I think they are playing with fire,” Dianne Jaffe, a senior portfolio manager at TCW, said of a protracted Congressional debate about further pandemic assistance, in an interview after the Fed’s decision. “If Congress was counting on the economy to reopen, and they clearly wouldn’t have to do any other package, Plan A is gone.”
Investors hope that Republicans, Democrats and the White House can agree on additional coronavirus assistance in the run-up to the end of the month when additional unemployment benefits are due to help cushion the pandemic’s economic blow.
Treasury Secretary Steven Mnuchin said that the Trump administration and Democrats were far apart on the proposed tax incentives bill.
Investors also tuned in to Washington testimonials from the nation’s leading tech executives, who raised tough questions about their business practices and allegations that they used their market power to thwart competition at a hearing before the House Judiciary Antitrust Subcommittee.
Jeff Bezos from Amazon.com Inc.
started the testimony, followed by Sundar Pichai from the Google parent Alphabet Inc.
Tim Cook from Apple inc.
and Mark Zuckerberg from Facebook Inc.
appear in front of the panel.
Live blog: CEOs from Amazon, Apple, Facebook and Google are grilled by House’s antitrust panel
Also read:Congress has over a million documents from Big Tech’s antitrust investigation and is ready to grill big CEOs
The busiest week of earnings reports continues, including the results of a number of well-followed companies, General Electric Co.
and aircraft manufacturer Boeing Co.
which is still faltering due to the grounding of its 737 MAX aircraft and uncertainty about the future of the flight due to the pandemic.
In US economic data, the trade deficit in goods declined to $ 70.6 billion in June, down 6.1% in June from the previous month. The pending home sales index rose 16.6% last month, helped by low interest rates, compared to May, the National Association of Realtors reported Wednesday.
Which companies are central?
- General Electric Co.
Equities declined 3.8% after the diversified industrial conglomerate reported a greater than expected second quarter loss, but exceeded expectations for sales and free cash flow.
- Boeing Co. USA: BA
Shares of declined 2.5% after the aerospace and defense giant reported a much greater than expected loss amid a large mass in commercial aircraft revenues.
- General Motors Co.
the stock was down 1.6% after the automaker lost less than expected in the second quarter and sales exceeded estimates.
- Shares of Starbucks Corp.
rose 3.8% after the coffee chain reported a less than expected loss and better than expected revenue in the fiscal third quarter at the end of Tuesday. Starbucks estimated that it lost more than $ 3 billion in sales due to the pandemic’s reduced shopping traffic, and said it would expand edge pickups.
- Advanced Micro Devices Inc.
shares rose more than 12.3% after the chip maker reported second-quarter earnings at the end of Tuesday that exceeded expectations and raised the full-year forecast.
- Shares of eBay Inc.
declined 2.5% after the e-commerce company delivered results on Tuesday afternoon, which were broadly in line with Wall Street expectations.
- Carnival Corp.. USA: CCL
shares rose 2.2% after it was announced on Wednesday that it expects to remove two more cruise ships from its previously planned fleet.
How do other markets trade?
In Asia, China’s CSI 300 index XX: 000300
jumped 2.4%, the Shanghai Composite CN: SHCOMP
rose 2.1%, Hong Kong’s Hang Seng Index HK: HSI
achieved 0.5% and Japan’s Nikkei 225 JP: NIK
Shares rose higher in Europe, with the Stoxx 600 Europe index XX: SXXP
and the UK FTSE 100 UK: UKX
both close less than 0.1%.
Gold futures US: GCQ20
rose nearly 0.5% and set a new all-time high of $ 1,953.40 an ounce, while the ICE US Dollar Index US: DXY
was down 0.3%. US: CLU20
Oil futures ended higher with the US benchmark US: CLU20
0.6% higher on the New York Mercantile Exchange.
The return on the 10-year US Treasury BX: TMUBMUSD10Y
were 1 basis point lower at 0.57%. Returns move in the opposite direction of prices.
William Watts made a contribution