US close: Dow rallies over 220 points after Fed drops 'patient' from interest rates statement
US stocks rallied on Wednesday after the Federal Reserve dropped the word “patient” from its interest rate guidance, but also said the first rate hike may not take place until September
Dow Jones I.A.
37,986.40
04:30 15/10/20
FedEx Corp.
$266.99
10:59 19/04/24
Kraft Foods Group, Inc.
$88.19
11:00 08/06/16
Nasdaq 100
17,037.65
12:15 19/04/24
Oracle Corp.
$114.88
11:09 19/04/24
The Dow Jones Industrial Average closed up 227.11 points, while the S&P 500 and the Nasdaq gained 23.85 and 41.75 points respectively.
The Federal Open Market Committee added that an increase in rates at its meeting in April “remains unlikely”, an indicator that expectations for tightening should be reined in.
Speaking on Wednesday, Fed chairwoman Janet Yellen claimed that inflation, which has largely fallen due to lower energy prices and a stronger dollar weighing on import prices, will gradually move back to 2%, although probably not before 2017.
“It will be appropriate to raise the target range for the federal funds rate when the committee has seen further improvement in the labour market and is reasonably confident that inflation will move back to its 2% objective over the medium term,” she said.
Paul Ashworth, chief US economist at Capital Economics, suggested that the Fed replaced its “patient” pledge with an explicit warning that rates are unlikely to rise in April in order to avoid a Treasury sell-off and a spike in yields.
The FOMC added that median forecast for the level of the central bank's main policy rate at year-end is now 0.625%, in comparison to the 1.125% projected in December.
"The Fed offset the potentially hawkish signal this new guidance might send with much more dovish expectations about the future path of interest rates," said Berenberg' s senior economist Christian Schulz.
"The change suggests that the Fed will step on the monetary brake early, but initially more gently than it previously expected."
Following the FOMC's decision, the dollar plunged 2.85% against the euro, shedding 1.9% and 1.2% against the pound and the yen respectively, while gold futures rose 1.83% to $1,169.20.
Elsewhere, data on Wednesday showed mortgage applications fell 3.9% last week, making it the fourth drop in five.
Applications for new loans to buy homes fell 2% however an indicator of home-owners appetite to refinance existing mortgages had a deeper decline of 5%.
In company news, FedEx fell 1.37% after revenue missed estimates, even though earnings topped analysts' expectations with third-quarter net profit of $580m, up 53% from $378m a year earlier.
Kraft Foods Group lost 1.8% after recalling 242,000 cases of Macaroni & Cheese Dinner boxes, saying specific products could contain small metal pieces.
Sports clothing group Quiksilver jumped 18.82% after reporting a smaller-than-expected loss on Tuesday, while Oracle rose 2.94% after lifting its dividend.
Oil prices swung into positive territory, despite data showing US crude inventories soared to 458.5m barrels in the week ended 13 March, their highest level in 80 years.
West Texas Intermediate jumped 3.66% to $45.11 a barrel, while Brent crude soared 5.59% to $56.68 a barrel.
S&P 500 - Risers
Transocean Ltd. (RIG) $15.25 +8.77%
Denbury Resources Inc. (DNR) $7.95 +7.58%
United States Steel Corp. (X) $23.83 +7.25%
Ensco Plc. (ESV) $21.70 +6.48%
Nabors Industries Ltd. (NBR) $12.94 +6.33%
Newfield Exploration Co (NFX) $33.37 +5.70%
Rowan Companies plc (RDC) $19.11 +5.52%
Noble Energy Inc. (NBL) $48.12 +5.50%
PPL Corp. (PPL) $34.05 +5.45%
Range Resources Corp. (RRC) $49.02 +5.04%
S&P 500 - Fallers
Charles Schwab Corp. (SCHW) $29.77 -3.66%
Adobe Systems Inc. (ADBE) $76.89 -3.48%
NASDAQ OMX Group Inc. (NDAQ) $49.52 -2.79%
Regions Financial Corp. (RF) $9.69 -2.02%
Mattel Inc. (MAT) $23.95 -2.00%
Lam Research Corp. (LRCX) $77.49 -1.89%
E*TRADE Financial Corp. (ETFC) $27.85 -1.85%
Delta Airlines Inc. (DAL) $45.81 -1.80%
eBay Inc. (EBAY) $58.42 -1.80%
Nvidia Corp. (NVDA) $22.87 -1.63%
Dow Jones I.A - Risers
Caterpillar Inc. (CAT) $81.33 +3.67%
Chevron Corp. (CVX) $106.70 +3.42%
Exxon Mobil Corp. (XOM) $86.07 +2.37%
AT&T Inc. (T) $33.59 +2.10%
Merck & Co. Inc. (MRK) $57.65 +2.09%
Unitedhealth Group Inc. (UNH) $119.96 +2.01%
Microsoft Corp. (MSFT) $42.50 +1.93%
International Business Machines Corp. (IBM) $159.81 +1.82%
E.I. du Pont de Nemours and Co. (DD) $76.01 +1.78%
Johnson & Johnson (JNJ) $101.46 +1.57%
Dow Jones I.A - Fallers
Wal-Mart Stores Inc. (WMT) $82.53 -0.11%
Cisco Systems Inc. (CSCO) $28.14 -0.04%
Nasdaq 100 - Risers
Baidu Inc. (BIDU) $210.95 +3.78%
Mylan Inc. (MYL) $64.96 +3.57%
Vimpelcom Ltd Ads (VIP) $5.54 +3.55%
Twenty-First Century Fox Inc Class A (FOXA) $34.92 +3.10%
Tesla Motors Inc (TSLA) $200.71 +3.07%
Seagate Technology Plc (STX) $55.30 +3.05%
Vodafone Group Plc ADS (VOD) $33.54 +2.57%
CA Inc. (CA) $32.36 +2.57%
Cognizant Technology Solutions Corp. (CTSH) $63.78 +2.46%
Priceline Group Inc (PCLN) $1,181.69 +2.44%
Nasdaq 100 - Fallers
Adobe Systems Inc. (ADBE) $76.89 -3.48%
Mattel Inc. (MAT) $23.95 -2.00%
eBay Inc. (EBAY) $58.42 -1.80%
Nvidia Corp. (NVDA) $22.87 -1.63%
Discovery Communications Inc. Class A (DISCA) $31.65 -1.43%
Wynn Resorts Ltd. (WYNN) $122.91 -1.34%
Keurig Green Mountain Inc (GMCR) $123.55 -0.77%
Ross Stores Inc. (ROST) $105.78 -0.56%
Maxim Integrated Products Inc. (MXIM) $36.05 -0.48%
Bed Bath & Beyond Inc. (BBBY) $75.87 -0.35%