- S&P 500 closes above 5,200 points
- Fed keeps interest rate at 5.5%, signals three 2024 cuts
- Chipotle gains on 50-to-1 stock split plan
4:12pm: Record-breaking session
US stocks notched new records after the Fed held interest rates steady at its latest meeting, as was widely expected, and signalled that it continues to see three rate cuts occurring in 2024.
The S&P gained 0.9% at 5,224 points, marking the first time the index has closed above 5,200.
The Nasdaq added more than 200 points or 1.3% at 16,369 points and the Dow was up 1% at 39,512 points, both new record closing levels.
2:35pm: Markets jump as Fed holds rates
The Dow Jones jumped 113 points to 39,223 as the Federal Reserve opted to hold interest rates on Wednesday, but noted improving indicators toward achieving its economic goals, most notably an inflation rate of 2%.
So-called dot plot projections for three one-quarter point cuts to base interest this year were held as a result, which would take the rate from 5.5% to 4.75%.
“The committee judges that the risks to achieving its employment and inflation goals are moving into better balance,” the Federal Open Market Committee noted in a press release.
The Nasdaq and S&P 500 also climbed on the news, adding 74 and 12 points respectively to reach 16,240 and 5,190.
Within the release, the Fed also bumped up gross domestic product forecasts to 2.1% for 2024, from 1.4%.
Inflation projections were also slightly increased from 2.4% to 2.6% for the year, though rate setters signalled a strong outlook on unemployment by noting “job gains have remained strong”.
Responding to the news, Principal Asset Management strategist Seema Shah commented: “There will be one question creating feelings of discomfort: how serious is the Fed about its 2% target?
“This summary of economic projections suggests that the Fed is willing to risk cutting rates before inflation is close to target and while GDP growth is above-trend.
“History teaches us this is a risky path.”
"It’s likely that monetary policy will remain restrictive for the rest of the year," Trufaltion's Oliver Rust added.
"We must all brace for interest rates to remain higher for longer than many have hoped. This is the new normal.
"With the economy projected to grow [...] policymakers can afford to adopt a wait-and-see approach."
12:10pm: Markets mixed ahead of Fed rate call
The Dow Jones just held onto earlier gains come Wednesday afternoon, sitting 14 points higher at 39,124 ahead of a key Federal Reserve meeting later in the day.
Anticipation ahead of the meeting, which is expected to see policymakers hold interest rates at 5.5%, had the S&P 500 and Nasdaq down in afternoon trading though.
By midday, the S&P 500 was marginally below its opening value at 5,178, while the Nasdaq slipped 3 points to 16,163.
“While the decision is not in much doubt, markets are on edge to see if [Fed chair] Jerome Powell will reduce the expected number of hikes this year,” IG analyst Chris Beauchamp commented ahead of the meeting.
“A move tonight is certainly not likely to happen, but even if the Fed finds itself on pause for the rest of the year, it might not stop US markets from moving higher still.
“The keys to further gains are higher earnings and a solid economy, and both those things are still in place in the US.”
Among companies, airlines and Boeing Co (NYSE:BA, ETR:BCO) were among risers on what emerged as a quiet day ahead of the Fed rate decision, though Chipotle topped the list with gains of over 4% after unveiling plans for a 50-for-1 stock split later this year.
For Boeing, further news over the manufacturer’s plan to buy supplier Spirit seemingly overshadowed its warnings that first-quarter cash burn would be higher than expected following January’s mid-flight door panel blow out, driving shares up 2.6%.
9:39am: Wall Street opens mixed as Chipotle announces stock split
Wall Street's main indexes opened mixed on Wednesday, with both the Nasdaq and the S&P 500 inching higher by 32 points and 2 points respectively.
The Dow Jones traded around 80 points lower to 39,031.
Restaurant Chipotle Mexican Grill jumped 5% after it announced its shares would be undergoing a 50-to-1 split in June.
Chipotle said it was one of the biggest splits in the history of the New York Stock Exchange.
"This split comes at a time when our stock is experiencing an all-time high driven by record revenues, profits, and growth,” said the company’s chief financial and administrative officer, Jack Hartung.
Investors' focus will likely be switching towards the Federal Reserve as it edges closer to completing its two-day policy meeting later today.
Interest rates are expected to be kept at 5.5%, with economists targeting June for a first cut, however, the market will look for comments today to provide any insight on the Fed's outlook.
“Despite the market still pricing in nearly three cuts for the year, the dot plot may show only two, especially given recent higher-than-expected CPI prints,” said Gargi Chaudhuri, head of iShares investment strategy, Americas at BlackRock.
8:31am: US stocks to open lower ahead of Fed decision
Wall Street is set to open lower as the US markets brace for the Fed's update on interest rates later today.
The Dow Jones is 51 points lower at 39,496 in premarket trading, while the Nasdaq is positioned to open up 43 points at 18,313.
The S&P 500 is set to begin trading unchanged at 5,178.
David Morrison at Trade Nation said: "US stock index futures have begun the day with a slight negative bias in quiet trade. But what was a touch surprising about yesterday’s session was how equities subsequently turned higher, with all the US majors ending in positive territory.
"This happened despite the caution expected given that the US Federal Reserve concludes its two-day monetary policy meeting early this evening."
Intel was one of the leading risers having jumped 3% after it was revealed that the White House plans to provide the company with a US$8.5 billion grant.