S&P 500 ends lower after Fed rate decision, Powell press conference

By Stephen Culp

NEW YORK (Reuters) – U.S. stocks closed mixed on Wednesday after the Federal Reserve left its key interest rate unchanged, as expected, but indicated that its next move will probably be to cut rates.

The S&P 500 and the Nasdaq ended lower while the Dow Jones Industrial Average notched a modest gain.

The Federal Open Markets Committee (FOMC) concluded its two-day monetary policy meeting with a unanimous decision to let the Fed funds target rate stand at 5.25%-5.50%.

The accompanying statement left the timing of any rate cut in doubt, and Fed officials underscored their concern that the first months of 2024 have done little to build the confidence they seek in falling inflation.

At the subsequent press conference, Fed Chair Jerome Powell suggested that while the central bank remains focused on bringing inflation back to its 2% target, he noted progress toward that goal and dismissed the notion of an imminent rate hike.

“Powell didn’t rock the boat very much,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “He acknowledged that inflation is still a problem but remained optimistic that it will improve over the coming quarters.”

“What sparked today’s rally was when he said the next move will not be a hike,” Detrick added. “He pushed back against that, hard. … That allowed the bulls to take charge.”

Powell said the labor market was normalizing, citing data released on Wednesday showing job openings dropping to a three-year low.

First-quarter reporting season has breezed passed the halfway point, with 310 of the companies in the S&P 500 index having reported. Of those, 77% posted consensus-beating earnings, according to LSEG.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.

Analysts now expect aggregate first-quarter S&P 500 earnings growth of 6.6% year-on-year, a significant improvement over the 5.1% estimate as of April 1, LSEG data showed.

Among individual companies, Advanced Micro Devices (NASDAQ:AMD) dropped after its disappointing artificial intelligence chip sales forecast, while Super Micro Computer (NASDAQ:SMCI) slid following the company’s quarterly revenue miss.

Amazon.com (NASDAQ:AMZN) rose on better-than-expected quarterly results as interest in AI helped drive cloud-computing growth.

Johnson & Johnson (NYSE:JNJ) advanced after it said it will proceed with a proposed $6.48 billion lawsuit settlement over allegations that its baby powder and other talc products cause ovarian cancer.

Starbucks (NASDAQ:SBUX) tumbled after the coffee chain cut its sales forecast as it posted the first drop in same-store sales in nearly three years.

CVS Health (NYSE:CVS) plunged after the healthcare company’s earnings fell short of consensus and it slashed its annual profit forecast.

According to preliminary data, the S&P 500 lost 18.12 points, or 0.36%, to end at 5,017.57 points, while the Nasdaq Composite lost 54.55 points, or 0.35%, to 15,603.27. The Dow Jones Industrial Average rose 78.54 points, or 0.21%, to 37,894.46.