4:10pm: Fed remarks stir volatility
Stocks ended Wednesday on a mixed note following remarks from Federal Reserve Chair Jerome Powell, who stated that it is "unlikely" the next policy move would be a rate hike.
While the S&P 500 and Nasdaq Composite declined over 0.3%, the Dow Jones Industrial Average rose by 0.2%, with all three indexes fluctuating during the volatile session.
Investors were attentive to corporate earnings, particularly as chipmaker AMD and server maker Super Micro Computer reported disappointing results, dragging down related stocks like Nvidia.
CVS and Starbucks also faced substantial declines after cuts to profit forecasts and a bad earnings miss, respectively.
Despite initial gains sparked by Powell's comments, stocks tapered off toward the end of trading, with technology stocks notably affected by mixed updates on artificial intelligence.
2.45pm: Fed keeps interest rates steady
The Federal Reserve has kept interest rates unchanged at its latest meeting citing a “lack of further progress” in recent months toward bringing inflation down to its 2% target.
Markets welcomed the Fed’s update, with the Nasdaq adding 1.1%, the Dow Jones up 1%, and the S&P 500 up 0.7%.
The central bank kept its benchmark interest rate in the range of 5.25% to 5.5%, a 23-year high. The benchmark interest rate has been in this range since July 2023.
“The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” Fed official said in a statement following the conclusion of its two-day meeting.
At a press conference on Wednesday afternoon, Fed chair Jerome Powell warned that it may take “longer than previously expected” for the Fed to gain confidence inflation is headed toward 2% and in turn, for it to reduce interest rates.
“So far this year, data has not given us that greater confidence. Readings on inflation have come in above expectations,” he said. “It is likely that gaining such greater confidence will take longer than previously expected.”
He added that is is "unlikely" the next policy move would be a rate hike.
12pm: Starbucks leads Nasdaq lower, DJIA seen higher
The Nasdaq 100 index fell 0.7% to 17,310 in today’s morning session, with Starbucks by far the worst performer with a 17% drop due to a poor second-quarter earnings release
Chipmaker AMD was down more than 8% following a tepid response to its earnings and forecasts.
Amazon, Alphabet, Sirius XM and Microsoft were among the biggest risers.
The Dow Jones Industrial Average added 0.3% to 37,924 while the broader S&P 500 was down 0.35% to 5,018.
10.06am: slow start to Wall Street
Wall Street has made a nervy start to May, with a mix of consumer-facing and tech stocks acting as the main drags, amidst the uncertainty ahead of the Federal Reserve decision later.
The S&P 500 has fallen 12 points or 0.25% in the opening half hour, with the Nasdaq Composite slipping 0.1% and the Dow Jones just above flat.
Amazon (NASDAQ:AMZN) is a notable riser, up 2.8% after overnight earnings impressed, led by its AWS cloud services arm.
But its a mixed bag among the other trillion-dollar titans, with Apple and Nvidia falling, offset by Microsoft and Alphabet gaining.
Semiconductor plays AMD (NASDAQ:AMD) and Super Micro Computer (NASDAQ:SMCI) are down 5% and 15% respectively.
The biggest faller in the S&P is CVS Health (NYSE:CVS), down 18% after first-quarter results for the pharmacy group fell short of expectations, with full-year outlook cut due to escalating medical costs impacting the wider US insurance sector.
Starbucks (NASDAQ:SBUX) is down 15% after reporting earnings that were felt to be somewhat decaffeinated.
Bitcoin is also sharply lower, down 5.5% today and the lowest in over two months.
“The recent downtrend can be attributed to increased profit-taking by investors who entered the market during the downturns of 2022 and 2023, as well as ETF investors who witnessed significant price appreciation on their shares after entering the market in the early weeks of 2024,” said Matteo Greco, research analyst at Fineqia International, in our daily crypto report.
7.17am: More Nasdaq gloom expected at opening bell
Wall Street futures are pointing lower for the first day of May ahead of the Federal Reserve decision and after the previous day saw a downbeat end to the past month.
The S&P 500 and Nasdaq Composite plummeted 1.6% and 2% respectively, while the Dow Jones fell 1.5%, which meant after a strong start to the year, the past month ended a run of five consecutive monthly gains.
For today, Dow futures are indicating a 0.2% decline is on the way, the S&P 500 a fall of 0.4% and Nasdaq 100 sliding 0.6%.
Strategist at Deutsche Bank says April "marked a change in tone from the positivity of Q1" for US equities, with the S&P 500 falling 4.16% after five consecutive monthly gains, whilst 10-year Treasury yields rose by the largest amount since September 2022 and gold and the US dollar rose.
"That was partly thanks to growing evidence of sticky US inflation, which led to questions about whether the Fed would be able to cut rates at all this year," says Reid. "But there were also fears about geopolitical tensions in the Middle East."
A quiet start in Europe due to the May Day holiday will get busier as North America wakes up and will be noisy later when the comments alongside the latest Fed decision are set to fascinate market followers.
Earnings announcements since the last closing bell include Amazon.com Inc, which posted healthy first-quarter earnings led by its cloud computing division.
Chipmaker Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) also delivered better-than-expected results for the first quarter but the optimism was overshadowed by its weak guidance for the current quarter, sending shares 6% lower in premarket.
Fellow semiconductor group Super Micro Computer Inc is down 13% premarket after its own earnings seemed mixed.