Stock Market News Today: Markets make small moves ahead of Fed rate decision (SP500)

Wall Street’s three major averages on Wednesday moved sharply higher after the Federal Reserve held steady on interest rates as widely expected and its updated dot plot allayed fears of fewer rate cuts this year.

Minutes after the Fed statement, the tech-heavy Nasdaq Composite (COMP:IND) reversed course and was now up 0.50% to 16,247.56 points. The benchmark S&P 500 (SP500) also did an about-turn and was now higher by 0.32% to 5,194.97 points. The blue-chip Dow (DJI) had gained 0.37% to 39,254.00 points.

Of the 11 S&P sectors, eight were now in the green.

Treasury yields showed a mixed reaction. The longer-end 30-year yield (US30Y) remained flat at 4.43%, while the 10-year yield (US10Y) inched down by 3 basis points to 4.26%. The shorter-end more rate-sensitive 2-year yield (US2Y) was little changed at 4.70%.

See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.

The Fed’s monetary policy committee kept the federal funds rate at a 22-year high of 5.25%-5.50%, as widely anticipated. The Fed’s updated Summary of Economic Projections showed that the central bank still expects three rate cuts in 2024, unchanged from the December dot plot.

“FOMC holds steady. There’s a thin median for three rate cuts in 2024. The core PCE inflation forecast for 2024 was revised up to 2.6% from 2.4% in December. The GDP forecast for 2024 was revised up to 2.1% from 1.4% in December,” the Wall Street Journal’s Fed watcher Nick Timiraos said on X (formerly Twitter).

“Fewer FOMC officials see upside risks to their unemployment forecasts compared with December but more of them see upside risks to their inflation forecasts,” Timiraos added.

The Fed decision will be followed by Powell’s presser at 1430 ET.

In the run-up to today’s Fed decision, inflation data had come in higher than anticipated, supporting the central bank’s cautious tone and denting market expectations for imminent interest rate cuts. The latter had especially affected yields, which are higher for the year as bonds have returned losses. Equities have stubbornly continued to hit record highs, driven by technology stocks.

At the beginning of the year, coming off the euphoria of the Fed’s long-awaited dovish pivot, Wall Street was pricing seven rate cuts in 2024, while the December 2023 Fed dot plot showed three rate cuts. With inflation continuing to remain sticky since then, traders will be paying close attention to Powell’s commentary on rate cuts at the presser.

Despite the Fed dominating almost all of today’s spotlight, there were also some earnings reports from some major Chinese firms. Gaming giant Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) delivered a quarterly revenue miss while announcing plans to double its stock buyback program. U.S.-listed shares of PDD (PDD) climbed after the Pinduoduo-parent and Temu operator beat quarterly estimates on growth in transaction services revenue.

Memory chipmaker Micron Technology (MU) will be reporting results after the closing bell.

Among other active stocks, Chipotle Mexican Grill (CMG) was among the top percentage gainers on the S&P 500 (SP500) after the restaurant chain said its board had approved a 50-for-one stock split.

Conversely, Equinix (EQIX) was among the top S&P percentage losers. Earlier, short-seller Hindenburg Research published a new report on the data center REIT.