The stock market’s initial reaction to the Fed’s decision to leave interest rates unchanged was negative as indexes sank to session lows.
The S&P 500 reversed lower 0.2%, and the Nasdaq composite deepened its loss to 0.4%. Small caps still led the stock market, with the Russell 2000 up 0.4%.
The Dow Jones Industrial Average was up 0.4% as IBM (IBM) jumped 2.6% to its highest level since December 2022. RBC Capital Markets initiated coverage on Big Blue Wednesday with an outperform rating and 188 price target.
Amgen (AMGN) also gave the Dow a boost as the stock broke out from the 268.24 buy point of a cup-with-handle base.
Volume rose on the Nasdaq and fell on the NYSE vs. the same time on Tuesday.
The Innovator IBD 50 ETF (FFTY) was up 0.4% after the Fed announcement.
Goosehead Insurance (GSHD) led the IBD 50 with a 4.8% gain in afternoon trading as it followed through from Tuesday’s breakout from a cup-with-handle base. The stock is now extended from its 73.85 buy point.
Also in the IBD 50, Stellantis (STLA) gapped up more than 2% in heavy trading after some good news for automakers.
Ford Motor (F) reached a labor agreement with union bosses in Canada. The pact avoided another strike as the United Auto Workers continue a strike against the Big 3. Ford and GM shares were down 0.8% and 1%, respectively.
Fed Pauses, As Expected
The Federal Reserve’s policymaking committee left the Fed funds rate at a range of 5.25%-5.50%.
“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook,” the statement read. “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
The Fed still projects at least one more rate hike this year.
Chairman Jerome Powell will hold a press briefing starting around 2:30 p.m. ET that should give some color on what the Fed is thinking for its November and December meetings, and beyond.
While the U.S. economy is proving to be resilient and the job market remains firm, Powell may comment on renewed inflation threats.
The price of crude oil remained above $91 a barrel Wednesday at midday, after rising to the highest close since Nov. 7 earlier this week. On Friday, gasoline futures also hit the highest since Nov. 7.
Treasury yields jumped from morning levels after the Fed announcement, to 4.35%. Late Tuesday, the yield stood at 4.37%.
On Tuesday, the benchmark 10-year yield climbed to 4.37%, the highest since Oct. 31, 2007, according to Dow Jones Market Data. The two-year yield rose to the highest since July 25, 2006. Today, the 10-year yield fell 4 basis points to 4.33%.
Instacart, Apple Among Stock Market Movers
Instacart parent Maplebear (CART) slid more than 5%. At an afternoon quote of about 31.65, the stock is below the 42 level at which it started trading at Tuesday’s IPO. It climbed as high as 42.95 Tuesday.
Apple (AAPL) fell more than 1% after analysts said early demand for the new iPhones is lagging.
UBS analysts said initial demand for the iPhone 15 “is mixed at best.” Delivery wait times for the Pro model across major markets are down by roughly a week compared with last year in markets including the U.S., Germany, Great Britain and France. China wait times for the iPhone 15 Pro are 23 days, compared with 39 days for the iPhone 14 Pro at the same point last year.
Delivery wait times for the most expensive device, the 15 Pro Max, “are also not materially extended” compared with the 14 Pro Max last year. UBS’ report comes two days after Wedbush Securities analyst Daniel Ives saw strong demand for the new high-end iPhones based on preorders.
General Mills (GIS) fell 0.8% in heavy trading, extending a four-month slide. The cereal and packaged-foods company beat sales and profit expectations for its August-ended quarter. In a positive sign for the economy, General Mills said inflation and supply-chain problems eased in the quarter.
Tesla (TSLA) fell 0.2% as it continues to work on a cup base with a 299.29 buy point. Its August new car registrations in the European Union rose to 27,285 from 7,855 in the year-ago period, Dow Jones reported.
Akamai Technologies (AKAM) is breaking out above the 107.47 buy point of a flat base. Volume is running about 50% above average.
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