U.S. stock indexes mostly ticked higher Wednesday after the Federal Reserve said it would keep interest rates steady near zero and retain its full range of tools to support the economic recovery during the pandemic.
How are stock benchmarks trading?
The Dow Jones Industrial Average
traded 42 points lower, or 0.1%, at 35,017, after swinging in and out of positive territory.
The S&P 500 index
was up 10 points, or 0.2%. at 4,411.
rose 120 points, or 0.8%, at 14,780.
On Tuesday, the Dow fell 85.79 points, or 0.2%, to 35,058.52. The The S&P 500 declined 20.84 points, or 0.5%, to 4,401.46 to snap a five-session winning run. The tech-heavy Nasdaq dropped 180.14 points, or 1.2%, to 14,660.58, its largest one day fall since May 12.
What’s driving the market?
Stocks got a boost after the Federal Reserve opted not to tighten monetary policy following a two-day meeting, reiterating that the path of recovery will depend on the virus.
Fed Chairman Jerome Powell stressed that vaccinations have been a major aid in the U.S. economic recovery, in an afternoon press briefing, but cautioned that their slowing pace and the delta variant of the coronavirus also remain risks.
Investors were hoping for clarity on when the central bank will begin tapering its $120 billion monthly bond purchases. While Powell said the topic continues to be studied by the central bank, he reiterated that any future decisions will remain data dependent, and that he’d also “want to see some strong jobs numbers.”
“I think it’s one more small step forward in their patient and methodical path” toward eventually scaling back monthly bond purchases, said Jason England, global bonds portfolio manager at Janus Henderson Investors, in an interview with MarketWatch.
“Obviously, they’ve made progress on the inflation front, but not as much on jobs.”
Powell reiterated that he expects inflation to eventually pull back closer to the Fed’s 2% annual target.
Beyond the Fed update, investors were bullish on the strength of second-quarter earnings reported thus far, with the earnings growth rate in the April through the end of June up nearly 80%, led by a 168% rate for the financial sector, according to data compiled by S&P Global Market Intelligence.
Robinhood, a popular trading app with individuals, is expected to price its initial public offering on Wednesday.
In Asia, the selloff in technology stocks in Hong Kong and China abated on Wednesday, as the Hang Seng
closed 1.5% higher after consecutive drops of at least 4% resulting from unexpected regulatory actions by the Chinese government.
On the public health front, the U.S. Centers for Disease Control and Prevention on Tuesday recommended that Americans — even those who are fully vaccinated — in parts of the country with “substantial or high” rates of COVID-19 go back to wearing masks in public indoor spaces as the delta variant of the coronavirus results in rising cases of COVID.
“The delta variant is an unknown right now,” said Eric Merlis, head of global markets trading at Citizens Bank. “It seems like stocks, for the most part, have looked past it, not ignored it.”
“It seems like something we are going to have to learn to deal with,” he told MarketWatch. “But that’s the positive outlook on it, and that opens up the possibility of more downside risk than upside risk.”
Google on Friday said it would postpone its return to office effort for most workers until mid-October in light of the delta variant, but also outlined a new policy where all workers eventually will need to be vaccinated at its U.S. campuses and globally.
On the data front, the U.S. trade deficit in goods rose 3.5% in June to record $91.2 billion, and advanced U.S. wholesale inventories climbed 0.8%, while retail inventories increased by 0.3% last month.
Which companies are in focus?
Pfizer Inc. PFE shares rose 3.5% after the company said Wednesday that a third dose of its COVID-19 vaccine likely provides further protection against the delta variant, which is more infectious and thought to be driving the recent surge in cases, hospitalizations, and deaths in the U.S.
Bristol-Myers Squibb Co. BMY said Wednesday it swung to a profit of $1.055 billion, or 47 cents a share, in the second quarter, after a loss of $85 million, or 4 cents a share, in the year-earlier period. Shares were up 2.1%.
Humana Inc. HUM shares skidded almost 4.6% lower after it reported second-quarter profit and revenue that beat expectations, but maintained its full-year adjusted earnings outlook, while saying it expects to record a $1 billion gain in the current quarter on its ownership of Kindred at Home.
Tapestry Inc. TPR said Wednesday that it will raise wages for all U.S. employees to at least $15 per hour, effective Sept. 5. Its shares were 0.9% lower.
Shares of Canadian cannabis company Tilray Inc. TLRY jumped 28% in trade Wednesday, after it swung to a profit in its fiscal fourth quarter.
How other assets are faring
The yield on the 10-year Treasury note
was up 2 basis points at 1.26%. Yields and debt prices move in opposite directions.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was up 0.3%.
Barbara Kollmeyer contributed reporting