U.S. Stocks Close Little Changed Following Fed Decision

After failing to sustain an early move to the upside, the major U.S. stocks indexes quickly gave back ground and spent much of the rest of Wednesday’s session lingering near the unchanged line. The major averages eventually ended the day narrowly mixed.

While the S&P 500 edged down 0.57 points or less than a tenth of a percent to 6,978.03, the Dow crept up 12.19 points or less than a tenth of a percent to 49,015.60 and the Nasdaq rose 40.35 points or 0.2 percent to 23,857.45.

The choppy trading on Wall Street continued after the Federal Reserve announced its widely expected decision to leave interest rates unchanged.

The Fed said it decided to maintain the target range for the federal funds rate at 3.50 to 3.75 percent following three consecutive quarter point rate cuts.

As with other recent decisions, the choice to leave rates unchanged was not unanimous, as Fed Governors Stephen Miran and Christopher Waller preferred cutting rates by another quarter point.

The Fed said the decision to leave rates unchanged came amid elevated uncertainty about the economic outlook.

The central bank also said it remains attentive to the risks to both sides of its dual mandate of maximum employment and inflation at the rate of 2 percent over the longer run.

“While not a unanimous vote, there does seem to be a clear and consistent majority in favor of a pause in this rate-cutting cycle, a pause that likely continues unless or until the job market weakens further,” said Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni.

He added, “With inflation remaining elevated, the FOMC majority does not seem in any rush to make further rate moves.”

CME Group’s FedWatch Tool suggests investors currently expect the Fed to keep rates on hold until after Fed Chair Jerome Powell steps down in May.

With the decision to leave rates unchanged almost universally expected, traders may have been more focused on earnings from several big-name tech companies after the close of trading.

Sector News

Despite the choppy trading by the broader markets, gold stocks moved sharply higher amid a continued surge by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.7 percent to a new record closing high.

Substantial strength was also visible among computer hardware stocks, as reflected by the 2.6 percent jump by the NYSE Arca Computer Hardware Index.

The index also reached a new record closing high amid a spike by shares of Seagate Technology, which soared by 19.1 percent after the data storage company reported better than expected fiscal second quarter results.

Semiconductor and networking stocks also saw considerable strength on the day, while oil service, pharmaceutical and biotechnology stocks showed significant moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan’s Nikkei 225 Index inched up by 0.1 percent, South Korea’s Kospi jumped by 1.7 percent and Hong Kong’s Hang Seng Index surged by 2.6 percent.

Meanwhile, the major European markets moved to the downside on the day. While the French CAC 40 Index slumped by 1.1 percent, the U.K.’s FTSE 100 Index slid by 0.5 percent and the German DAX Index fell by 0.3 percent.

In the bond market, treasuries moved lower early in the session and saw continued weakness after the Fed announcement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 2.8 basis points at 4.251 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to earnings news from tech giants Microsoft (MSFT), Meta Platforms (META) and Tesla (TSLA).

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