US close: Markets finish higher as Fed cuts interest rates
Wall Street indices finished in the green on Wednesday, as the Federal Reserve sated investor expectations and confirmed a 25 basis point cut to its interest rate targets, but strongly suggested that was the end of its easing cycle for the moment.
The Dow Jones Industrial Average was up 0.43% at 27,186.69, the S&P 500 added 0.33% to 3,046.77, and the Nasdaq 100 was 0.44% firmer at 8,083.11.
Late in the session, the Federal Open Market Committee confirmed it was lowering its benchmark interest rate target by 25 basis points, to between 1.5% and 1.75%, which was widely expected by markets.
At the same time, the Fed indicated a pause in its rate cut cycle, removing the clause committing it to “act as appropriate to sustain the expansion” from its post-meeting statement.
“The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate,” the FOMC said in its statement.
Federal Reserve chair Jerome Powell said the central bank’s policy would remain consistent going forward, so long as economic data remained broadly consistent with its forecast for a strong employment market, moderate economic growth, and inflation near its 2% target.
“We believe monetary policy is in a good place to achieve these outcomes,” he said.
“We see the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook.”
Earlier, investors were digesting news that the Chilean government had decided to cancel the Asia Pacific Economic Cooperation (APEC) summit that had been scheduled for 16-17 November due to the recent violent protests in the country.
US President Donald Trump and Chinese Premier Xi Jinping were expected to meet at APEC, with many anticipating some form of agreement to be reached between the US and China.
“Phase one of the US-China trade deal was tipped to be signed at the event, but the progress that has been made in the negotiations should still stand,” said CMC Markets senior market analyst David Madden.
In economic news, a preliminary estimate on third quarter US gross domestic product from the Department of Commerce revealed a 1.9% expansion in economic activity over the quarter, higher than consensus expectations for 1.6%, which was driven by a 2.9% jump in household consumption, beating forecasts for 2.6% growth.
That came alongside a 3.8% drop in spending on equipment, however, which was the steepest drop since the first quarter of 2016.
Ian Shepherdson of Pantheon Macroeconomics said the GDP figures “could have been worse”, adding that the fourth quarter was likely to be.
“But the leading indicators for Q4 here are grim too.
“Indeed, our initial working assumption for Q4 GDP growth is just 1%, but if inventories and exports are as bad as some of the indicators suggest, then a zero or even a sub-zero reading is entirely possible.”
In the labour market, consultancy ADP reported that private sector payrolls were up by 125,000 in October, beating consensus forecasts for 120,000, although that was on the heels of a downwardly-revised increase of 93,000 in the month before, falling short of expectations for 135,000.
Over in the corporate space, General Electric finished the session up 11.84% in the wake of its latest quarterly earnings.
Apple managed to claw back earlier losses but still closed down 0.01%, after a Bloomberg report quoted a person “familiar with the company's production plans” as saying that the manufacturer expected iPhone sales would return to growth in 2020.
In deal news, Fiat Chrysler and French rival Peugeot confirmed that they were in talks aimed at a possible merger, sending stock in the former up by 5.27% in Wall Street trading.
Dow Jones - Risers
Johnson & Johnson (JNJ) $132.84 2.83%
McDonald's Corp. (MCD) $196.92 2.22%
Merck & Co. Inc. (MRK) $86.28 1.32%
United Technologies Corp. (UTX) $143.88 1.30%
Microsoft Corp. (MSFT) $144.61 1.25%
Procter & Gamble Co. (PG) $124.94 1.08%
Verizon Communications Inc. (VZ) $60.83 1.05%
Nike Inc. (NKE) $90.19 1.02%
Unitedhealth Group Inc. (UNH) $254.89 0.99%
Coca-Cola Co. (KO) $53.94 0.99%
Dow Jones - Fallers
Chevron Corp. (CVX) $116.36 -1.50%
Exxon Mobil Corp. (XOM) $67.72 -1.05%
Goldman Sachs Group Inc. (GS) $215.81 -0.84%
Boeing Co. (BA) $346.06 -0.82%
Walgreens Boots Alliance, Inc. (WBA) $55.86 -0.73%
Caterpillar Inc. (CAT) $140.35 -0.70%
JP Morgan Chase & Co. (JPM) $125.73 -0.55%
3M Co. (MMM) $168.34 -0.26%
Apple Inc. (AAPL) $243.26 -0.01%
Dowdupont Inc. (DWDP) $30.52 0.00%
S&P 500 - Risers
Mattel Inc. (MAT) $12.02 13.78%
General Electric Co. (GE) $10.11 11.47%
Garmin Ltd. (GRMN) $96.35 9.60%
Centene Corp. (CNC) $54.04 8.27%
Ipg Photonics Corp. (IPGP) $133.56 7.32%
FMC Corp. (FMC) $90.97 7.14%
Wellcare Healthplans (WCG) $299.39 5.05%
Boston Properties Inc. (BXP) $138.93 4.22%
Netflix Inc. (NFLX) $291.45 3.64%
Masco Corp. (MAS) $46.22 3.52%
S&P 500 - Fallers
CH Robinson Worldwide Inc (CHRW) $77.08 -14.85%
McKesson Corp. (MCK) $136.80 -8.44%
Yum! Brands Inc. (YUM) $103.34 -5.81%
Devon Energy Corp. (DVN) $20.25 -5.37%
Nordstrom Inc. (JWN) $35.21 -5.12%
L Brands Inc (LB) $16.86 -5.01%
Edison International (EIX) $62.16 -4.95%
National Oilwell Varco Inc. (NOV) $22.67 -4.91%
Public Storage (PSA) $223.26 -4.87%
Schlumberger Ltd. (SLB) $33.10 -4.86%
Nasdaq 100 - Risers
Workday, Inc. (WDAY) $164.10 3.79%
Netflix Inc. (NFLX) $291.45 3.64%
Activision Blizzard Inc. (ATVI) $55.87 3.46%
Wynn Resorts Ltd. (WYNN) $123.72 2.91%
Adobe Systems Inc. (ADBE) $278.41 2.56%
Ctrip.Com International Ltd. Ads (CTRP) $32.32 2.47%
Electronic Arts Inc. (EA) $96.72 2.45%
DENTSPLY Sirona Inc. (XRAY) $55.33 2.29%
Autodesk Inc. (ADSK) $148.78 2.19%
T-Mobile Us, Inc. (TMUS) $83.27 1.83%
Nasdaq 100 - Fallers
Texas Instruments Inc (TXN) $117.79 -2.08%
American Airlines Group (AAL) $30.29 -2.04%
Qurate Retail Inc. (QRTEA) $9.65 -1.83%
Illumina Inc. (ILMN) $296.51 -1.75%
Mondelez International Inc. (MDLZ) $52.03 -1.51%
Verisk Analytics Inc. (VRSK) $147.92 -1.47%
Comcast Corp. (CMCSA) $44.69 -1.46%
Align Technology Inc. (ALGN) $252.71 -1.33%
Fastenal Co. (FAST) $36.29 -1.20%
Xilinx Inc. (XLNX) $91.26 -1.16%