The Dow Jones industrial average hit its first record closing high since January 2022 and the S&P 500 and Nasdaq rallied more than 1% each on Wednesday after the Federal Reserve signaled that its interest rate-hiking policy is at an end and that it sees lower borrowing costs in 2024.
In its policy statement, the Fed also left interest rates steady, as expected, and a near-unanimous 17 of 19 Fed officials projected that the policy rate will be lower by the end of 2024.
Stocks sharply extended gains as Fed Chair Jerome Powell said during a press conference that the Fed is "not likely" to hike further and that the Fed is "very focused on not making the mistake of keeping rates too high for too long."
Market Snapshot
The S&P 500 climbed 1.37% to end the session at 4,707.09 points. The Nasdaq gained 1.38% to 14,733.96 points, while Dow Jones Industrial Average rose 1.40% to 512.30 points.
Market Movers
Apple's stock reached a record high close on Wednesday, lifted in a broad Wall Street rally after the Federal Reserve signaled lower borrowing costs are coming in 2024.
Apple's stock climbed 1.7 per cent to end the day at $197.96 per share, beating the iPhone maker's previous record high close of $196.45 on July 31.
Coinbase Global Inc. is rolling out spot crypto trading on its international exchange as part of a global expansion, saying some users are wary of US venues due to the country’s uncertain regulatory backdrop. Coinbase's stock climbed 7.76 per cent on Wednesday.
Pfizer tumbled 6.7% after the drug company revised its guidance for 2024, saying it anticipates adjusted earnings in the range of $2.05 to $2.25 a share. Analysts had been calling for adjusted profit of $3.16 a share. Pfizer said it expects to close the acquisition of Seagen on Thursday. The guidance includes the oncology drug developer. Vaccine maker Moderna rose 0.7%.
Etsy fell 2.2% after the online-shopping site said it would be cutting 11% of its workforce, or about 225 employees, in a cost-saving move.
Tesla was up 1% even after the National Highway Traffic Safety Administration said the electric-vehicle maker was recalling more than two million vehicles because of control issues with its driver-assistance system Autopilot.
Take-Two Interactive Software was rising 3.8% after Nasdaq announced that the videogame publisher would be added to the Nasdaq-100 index, effective Dec. 18.
Southwest Airlines declined 3.9% after the carrier said it was targeting year-over-year growth of a low- to mid-single-digit percentage in available seat miles beyond 2024. It previously had targeted annual mid-single-digit percentage growth.
Vertex Pharmaceuticals rose 13% after reporting positive Phase 2 study results for a drug to treat pain from diabetic peripheral neuropathy.
U.S. Steel was up 6% on reports the steel company has received multiple buyout bids. U.S. Steel over the summer announced it was looking at “strategic alternatives” including a sale of the entire company or some of its assets.
Blend Labs rose 7.4% after Keefe Bruyette raised its price target on shares of the fintech company to $1.85 from $1.50 and maintained a Market Perform rating on the stock.
Market News
Fed Holds Rates Steady, Indicates Three Cuts Coming in 2024
The Federal Reserve on Wednesday held its key interest rate steady for the third straight time and set the table for multiple cuts to come in 2024 and beyond.
With the inflation rate easing and the economy holding in, policymakers on the Federal Open Market Committee voted unanimously to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%.
Along with the decision to stay on hold, committee members penciled in at least three rate cuts in 2024, assuming quarter percentage point increments. That’s less than market pricing of four, but more aggressive than what officials had previously indicated.
Powell Says Rate Cuts Begin to Come into View, and Is Now a Topic of Discussion
Powell says inflation is still too high and the committee is fully committed to bringing inflation back to the 2% target.
“The committee is proceeding carefully,” Powell says, an indication there is no near-term adjustment in rates expected.
The labor market remains tight but supply and demand are coming into a better balance, Powell says.