Stocks end lower for 1st time in 3 days after Fed rate decision
Stocks ended lower for the first time in three days on Wednesday after the Federal Reserve left interest rates unchanged and suggested that lower rates were unlikely in the near future despite low inflation, given healthy economic growth and low unemployment.
Fed Chairman Jerome Powell said in a news conference that low inflation may only be “transitory” and that economic growth was "solid".
“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” the Fed said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 43870.35 | +461.88 | +1.06% |
| SP500 | S&P 500 | 5948.71 | +31.60 | +0.53% |
| I:COMP | NASDAQ COMPOSITE INDEX | 18972.420086 | +6.28 | +0.03% |
The decline for the Dow Jones Industrial Average was its largest one day fall since April 9 and the S&P 500 saw its biggest fall since March 22.
Stocks rose earlier in the day following positive earnings news, particularly from Apple which saw its stock soar 7 percent, enabling the phonemaker to regain its $1 trillion market capitalization first seen last summer.
Overall, first quarter corporate earnings have not been as dire as analysts expected leading to new record highs in the benchmark S&P500 and Nasdaq indexes this week.
After the market closed, Qualcomm reported a decline in second-quarter earnings and revenues, reflecting the ongoing slump in the semiconductor market and its stock fell 4.0 percent.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 228.52 | -0.48 | -0.21% |
| GOOGL | ALPHABET INC. | 167.63 | -8.35 | -4.74% |
| XOM | EXXON MOBIL CORP. | 121.91 | +1.56 | +1.30% |
| QCOM | QUALCOMM INC. | 155.46 | +1.19 | +0.77% |
Earlier Wednesday ADP reported private payrolls grew by 275,000 in April ahead of Friday's US Labor Department unemployment report for the month. However, in other data the Institute of Supply Management monthly manufacturing index fell to its lowest level since October 2016.
Developments in the trade conflict between America and China were also on the radar, with U.S. Treasury Secretary Steven Mnuchin calling the latest round of meetings “productive.” Negotiations will continue in Washington next week.
Short-term Treasury yields rose Wednesday, coming sharply off their session lows, after Fed Chairman Jerome Powell said the recent decline in inflation was unlikely to last, and a change to interest rates wasn’t necessary.
The benchmark 10-year Treasury note yield rose to around 2.511%, from a session low of 2.459%.
Elsewhere, oil tumbled as a report showed U.S. crude stockpiles swelled to their highest levels since 2017 while American production set a new record.
Holidays across much of Asia, Europe and Latin America crimped trading volumes.