The S&P 500 and Nasdaq scored their biggest daily percentage gains since Feb. 22 and the Dow rose on Wednesday as chip stocks rallied and the Federal Reserve kept U.S. interest rates unchanged while signaling possible easing in September if inflation cools.
The Fed kept its benchmark overnight interest rate in the 5.25%-5.50% range as it ended its two-day policymaking meeting on Wednesday, but opened the door to easing in September, seven weeks shy of the November U.S. elections. The benchmark U.S. 10-year note yield fell 9.8 basis points to 4.043%.
Market Snapshot
The Dow Jones Industrial Average rose 0.24% to 40,842.79, the S&P 500 gained 1.58% to 5,522.30 and the Nasdaq Composite advanced 2.64% to 17,599.40.
Market Movers
Meta Platforms — Shares of the social media giant rallied more than 7%. Meta Platforms topped revenue and earnings expectations for the recent quarter, posting earnings of $5.16 per share on $39.07 billion in revenue. The company also offered a strong forecast for the current period.
Qualcomm — The chip company slipped 1% after topping Wall Street’s fiscal third-quarter estimates and issuing strong guidance for the current quarter. Qualcomm posted adjusted earnings of $2.33 per share on $9.39 billion in adjusted revenue. For the current period, the company expects sales to range between $9.5 billion and $10.3 billion.
Arm Holdings — The U.K.-based semiconductor stock shed more than 12%. Arm forecast adjusted earnings ranging between 23 cents and 27 cents per share for the fiscal second quarter , while analysts called for 27 cents, per LSEG. The decline came despite a top- and bottom-line beat for the fiscal first quarter.
Teladoc — The telehealth stock slid 14% after posting worse-than-expected revenue in the second quarter. Teladoc said it recorded $642 million, while analysts polled by LSEG had forecast $650 million. The company also withdrew its full-year and long-term outlook.
Etsy — The e-commerce stock dropped 1.7% on mixed quarterly results. Etsy topped revenue expectations, but adjusted earnings fell 4 cents short of an LSEG consensus estimate of 45 cents per share.
Cheesecake Factory — The restaurant chain dropped more than 2%. Adjusted earnings for the second quarter came in at $1.09 per share, beating consensus estimates for $1 per share, according to FactSet. Revenue missed expectations, however, with Cheesecake Factory reporting $904 million, while analysts called for $909.2 million.
eBay — Shares were unchanged even after the e-commerce platform posted a beat on both the top and bottom lines for its second quarter. EBay also forecast that its third-quarter adjusted earnings would come in between $1.15 and $1.20 a share, higher than the $1.13 analysts polled by LSEG had expected.
Western Digital — Shares of the data storage manufacturer tumbled 4%. Western Digital issued underwhelming revenue guidance for the fiscal first quarter, ranging from $4 billion to $4.2 billion. Analysts polled by LSEG called for $4.2 billion. The company beat on top and bottom lines in the fiscal fourth quarter.
Lam Research — Lam Research shares slipped more than 2%. The semiconductor equipment maker surpassed Wall Street’s estimates on the top and bottom lines. The company offered in-line earnings per share guidance for the current quarter.
MGM Resorts — The resort stock ticked lower by more than 2%, even as the company posted better-than-expected second-quarter results. MGM Resorts posted adjusted earnings of 86 cents a share on $4.33 billion in revenue. That topped the earnings of 62 cents per share and $4.22 billion in revenue expected by analysts polled by LSEG.
Kyndryl Holdings — Shares of the IT infrastructure services provider that was spun out of IBM added 3% after posting mixed quarterly results. Kyndryl Holdings posted revenue of $3.74 billion, falling short of the $3.79 billion expected by analysts surveyed by LSEG.
C.H. Robinson — The logistics company rallied more than 10% after posting mixed second-quarter results. Adjusted earnings topped estimates, while revenue came up short of the $4.53 billion expected by analysts polled by LSEG.
Market News
Fed's Powell puts September rate cut on table as US inflation cools
Federal Reserve Chair Jerome Powell said on Wednesday interest rates could be cut as soon as September if the U.S. economy follows its expected path, putting the central bank near the end of a more than two-year battle against inflation but square in the middle of the nation's presidential election campaign.
The Fed ended its latest two-day policy meeting with a decision to hold its benchmark interest rate steady in the 5.25%-5.50% range that was set a year ago, but its statement softened the description of inflation and said the risks to employment were now on a par with those of rising prices - neutral language that opens the door for rates to fall after more than two years of tightening credit.
Slowing wage gains restrain US labor costs in second quarter
U.S. labor costs increased moderately in the second quarter as private sector wages grew at the slowest pace in 3-1/2 years, more evidence that inflation was firmly on a downward trend and could help facilitate an interest rate cut in September.
The report from the Labor Department on Wednesday followed data last week showing inflation subsided considerably last quarter, with sub-3% readings in all the measures. Labor costs are likely to cool further as the jobs market continues to ease.