US close: Markets higher as investors digest fresh data, Fed decision
US stocks finished in the green on Thursday, as investors digested fresh readings on manufacturing and jobs, and continued to mull over a more dovish policy statement than expected from the Federal Reserve, which prompted concerns about the US economy.
Dow Jones I.A.
37,770.58
04:30 15/10/20
Nasdaq 100
17,265.41
05:45 25/04/24
The Dow Jones Industrial Average ended the session up 0.84% at 25,962.51, the S&P 500 added 1.09% to 2,854.88, and the Nasdaq 100 was ahead 1.52% at 7,493.27.
Overnight, the US central bank sated markets expectations by standing pat on interest rates, holding steady on its target of between 2.25% and 2.5%.
The Federal Reserve also made it clear that no further increases in its interest rate targets would be delivered this year, given inflation was waning and economic growth was slowing.
Federal Open Markets Committee members continued to indicate they believed the balance sheet runoff would end by September, while also slashing their US economic growth estimate for the year to 2.1%.
The members also agreed to take the shears to the Fed’s personal consumption expenditure inflation forecast, dropping it to 1.8% from a previous 1.9%, while its core PCE estimate remained at 2%.
In the post-meeting press conference, Fed chair Jerome Powell said there was "no need to rush to judgment" when it came to its more cautious stance, with the Fed’s policy on its balance sheet set to ensure a “smooth [and] predictable” end to its runoff.
“Yesterday’s much-awaited FOMC meeting verdict certainly didn’t fail to disappoint, with a significantly more dovish that expected message emerging,” said AxiTrader chief market analyst James Hughes.
“Just three months ago, the Fed was talking of two rate hikes this year, but now that’s been revised down to none.
“With domestic growth revised lower and a slowing global economy being flagged too, even the prospect of cheaper borrowing was insufficient to shore up stocks.”
Figures released by the Department of Labor earlier showed that US jobless claims, one of the most closely-followed indicators of the health of the jobs market, dropped more sharply than expected over the preceding week.
Initial jobless claims for the week ending on 16 March fell by 9,000 to 221,000.
Economists at Barclays Research had forecast a reading of 225,000.
The four-week moving average meanwhile, which aims to smooth out the fluctuations in the data from one week to the next, was up by 1,000 to 225,000.
Secondary unemployment claims - which are not filed for the first time - dropped by 27,000 to 1.75m.
“The trend is a bit higher than last fall, because growth has slowed as the kick from the tax cuts and the plunge in gas prices has faded,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“We expect a gradual creep higher through mid-year, but claims will remain extremely low by historical standards, and the increase won’t be enough to change people's’ very favourable view of the state of the labour market.”
Elsewhere, the Philadelphia Fed business activity index rose to 13.7 in March from -4.1 the month before, which was the first negative reading in almost three years.
That was well above consensus expectations for a reading of 4.6.
The current new orders index improved to 1.9 from -2.4 in February, while the current shipments index was up 25 points at 20.0.
“The 17.8-point leap in the headline index reverses most, but not all, of February’s unexpectedly steep 21.1-point plunge, and brings the Philly index back into line with the Empire State survey,” Shepherdson added.
“But the underlying trend is still downwards, and we’d be surprised if this report means that the index has bottomed.
“The downshift in Chinese manufacturing has led the rollover in global PMIs and the lags suggest that further declines are coming in the DM numbers.”
In corporate news, shares in Micron Technology surged 9.62% after the chipmaker's second-quarter earnings beat expectations, with its board saying it saw a recovery in the memory chip market.
Shares in Olive Garden owner Darden Restaurants rose 6.87% after its third-quarter profit and sales topped analysts' expectations and the company boosted its full-year guidance
Going the other way, Biogen tanked 29.23% after the biotech company said it was halting research for its experimental Alzheimer's drug, which was unlikely to be effective.