4:10pm: Fed's steady stance sparks rally
Wall Street rallied on Wednesday to close higher as investors responded positively to the Federal Reserve's decision to keep interest rates steady.
The Nasdaq won the day with a 2.6% increase to finish at 17,599, propelled in part by buoyant semiconductor stocks.
The S&P 500 rose nearly 1.6% to finish at 5,522 and the Dow Jones gained 0.2% to close at 40,843.
Earlier in the afternoon Fed Chair Jerome Powell indicated that a rate cut in September is possible, though no decisions have been made.
Investors also geared up for a big slate of earnings after the bell, with Meta, Arm and Qualcomm on deck to report.
2:45pm: Fed holds rates steady
The Federal Reserve held rates steady in the range of 5.25% to 5.5% but signalled it is nearing a rate cut, noting falling inflation, expanding economic activity and moderating jobs growth.
“Inflation has eased over the past year but remains somewhat elevated,” the central bank said in a statement. “In recent months, there has been some further progress toward the Committee's 2% inflation objective.”
The Fed’s decision did not dampen Wednesday’s stock rally.
The Nasdaq led the gains, boosted by chipmakers Nvidia and AMD. It added 2.6% at 17,594 points.
The S&P 500 was up 1.8% at 5,532 points and the Dow Jones gained 0.8% at 41,078 points.
1:30pm: Nasdaq gaining
The Nasdaq continued to gain by early afternoon, adding 2.1% to sit at 17,517 points.
Its counterparts the S&P 500 and the Dow were also in postive territory, with the S&P up 1.4% and the Dow around 0.5% higher.
11:30am: Starbucks shines post earnings
Starbucks' ability to maintain in-line margin and earnings per share despite declines and increased promotions demonstrates its potential to reduce operating costs and manage expenses, Bank of America analysts wrote following its fiscal 3Q earnings beat.
"While the third quarter's modest sequential United States comparable store sales improvement (negative two percent versus negative three percent in the second quarter) was in-line with consensus (versus negative three percent and negative two percent Bank of America and ValueAct consensus), better transaction trends (negative six percentage points versus negative seven percentage points in the second quarter) suggest promotions and menu innovation are gaining traction.
"With Starbucks seeing increased frequency across every Rewards Member decile, the opportunity lies in expanding reach to non-Starbucks Rewards members (approximately sixty percent of customers); more paid advertising should help."
10.50am: ADP jobs lower than expected
The ADP jobs survey showed that private employers added 122,000 jobs in July, below the 150,000 consensus forecast.
Job growth in June was also revised a little higher to 155,000 from 150,000 previously.
Pay growth slowed in July according to the survey, with median pay growth for job stayers slowing to 4.9%, the lowest since August 2021.
For job changers, pay growth slowed to 7.7% from 7.8%, which was the third least since 2021, resuming a trend seen in January and February.
Bill Adams, chief economist for Comerica Bank in Dallas, says the cooler jobs and wage data "support the Fed cutting soon, but they will likely wait until September to bolster their credibility".
Data on job openings, hires and quits released yesterday also "point to a labor market with much less hiring and churn than a year or two ago", he adds.
"The Fed will see the latest labor market data as justifying lower interest rates over the next year," he adds.
"But they will probably hold the fed funds target unchanged at today’s decision to bolster their credibility, which they fear was dented by the last few years’ high inflation.
"A recession seems unlikely near-term despite the drag from high interest rates. Most businesses that are struggling against the effects of high interest rates will likely still hold onto workers, hoping for better times when rate cuts arrive, and fearing difficulties rehiring if they cut back too much."
9.49am: Stocks start higher
Wall Street stock indices started Wednesday's session higher, led by the tech-stacked Nasdaq, though the Dow Jones was struggling.
The Nasdaq Composite surged 1.75% in early trading, with the S&P 500 rising 1.13% and the Russell 2000 adding 0.63%.
A fall 1.5% for Microsoft after its earnings last night, plus drops for UnitedHealth and J&J, saw the Dow Jones dip into the red.
Among the Nasdaq tech giants, Apple rose 1.2%, Nvidia 9%, Tesla almost 4%, Broadcom 7.3% and ASML 7.4%.
Topping the lot, AMD flew 10% higher after the chipmaker's stronger-than-expected earnings yesterday evening.
Kraft Heinz Co (NASDAQ:KHC, ETR:KHNZ) shares rose 3% despite the Oscar Mayer and Jell-O maker reporting mixed results, with adjusted earnings slightly exceeding analyst expectations but revenue falling short.
Boeing Co (NYSE:BA, ETR:BCO) shares made a small initial gain after the announcement that industry veteran Kelly Ortberg will take the helm as CEO next month as the plane maker grapples with mounting losses on the back of quality control issues.
9am: AMD the 'clearest contender to Nvidia' in AI chips
Chipmaker Advanced Micro Devices Inc, a (distant) competitor to Nvidia in the GPU space, is expected to soar more than 9% when Nasdaq trading begins.
The bullish price action follows the Santa Clara-based fabless microchip maker’s stronger-than-expected second-quarter earnings, where adjusted operating income knocked above market forecasts of $1.25 billion to touch $1.26 billion.
AMD ramped up shipments of its AI-focused chip range, with sales of its flagship MI300X cloud-computing accelerators exceeding $1 billion.
Analysts at Wedbush said AMD has emerged as "the clearest contender to Nvidia in supplying AI GPUs/accelerators".
7.30am: Nasdaq rebound expected
Ahead of the Federal Reserve decision later, tech stocks are set to power a rebound for Wall Street on Wednesday, despite Microsoft earnings overnight leaving investors cold.
Futures for the tech-filled Nasdaq 100 were up 1.68%, while those for the broader S&P 500 rose 1%.
Dow Jones futures have gained just 0.12% and for the small cap Russell 2000 were up 0.65%.
The prior day's trading was mixed, with the Nasdaq Composite tumbling 1.3% and the S&P 500 falling 0.5%, but the more concentrated Dow Jones rose 0.5% and the Russell 2000 edged up 0.35%.
Most of the big tech names ended lower, led by a 7% fall for Nvidia and 4% decline for Tesla.
Microsoft Corp (NASDAQ:MSFT) shares fell 5% afterhours following its fiscal fourth quarter revenues and profits beating Street estimates but a Cloud revenue miss.
Shares in the Redmond colossus are down 3% in premarket trading, while Nvidia is up almost 7% premarket.
Instragram owner Meta Platforms is the next of the 'Magnificent 7' tech behemoths to report after today’s close, followed by Apple and Amazon tomorrow.
Economic data before the Fed decision includes the Chicago PMI, pending home sales and EIA oil market numbers.
Federal Open Market Committee (FOMC) policymakers will publish an interest-rate decision and statement at 2pm ET.