© Reuters. FILE PHOTO: Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo
By Carolina Mandl and Bansari Mayur Kamdar
(Reuters) – U.S. stocks ended Wednesday little changed following a Federal Reserve rate hike that left the door open for future hikes, but the Dow scored a 13-day winning streak.
The Fed lifted its benchmark overnight interest rate by a widely expected 25 basis points, marking the 11th hike in the U.S. central bank’s past 12 policy meetings.
Fed Chair Jerome Powell said in a press conference the central bank will make decisions meeting by meeting, closely watching economic data, but noted that a rate cut is very unlikely this year.
Goldman Sachs (NYSE:) said in a note to clients that the Fed’s statement did not signal a slower pace of hikes in the future, but that the bank was expecting a hold in September.
“The message for the market was that it didn’t move the needle. There’s always a fear of a big surprise,” said Angelo Kourfafas, investment strategist at Edward Jones.
Powell’s message was clearly that the Fed will wait and see economic data to make new decisions, said Schutte, chief investment officer at Northwestern (NASDAQ:) Mutual Wealth Management. “I think the Fed won’t stop until they see wage inflation down.”
Following long-awaited earnings on Tuesday, big tech companies’ shares had mixed reactions.
Microsoft (NASDAQ:) eased 3.72% after laying out an aggressive spending plan to meet demand for its new artificial intelligence (AI)-powered services. The Windows maker still surpassed estimates for quarterly revenue and profit.
Alphabet (NASDAQ:) gained 5.78% after the Google parent’s second-quarter profit exceeded Wall Street expectations on steady demand for its cloud services and a rebound in advertising.
The NYSE FANG+ index, which houses many megacap growth names, dropped 0.72%. The index has rallied roughly 75% so far this year on optimism over AI and hopes that the Fed is nearing the end of its rate hiking cycle.
“After extreme gains so far this year in big tech stocks, we have now moved to a phase where each company’s stock price is very non-correlated to one another,” said David Bahnsen, chief investment officer of the Bahnsen Group.
Meta Platforms rose 1.39% after Alibaba (NYSE:)’s cloud unit said it would support the Facebook (NASDAQ:) owner’s open-source AI model, Llama.
As of Wednesday, 77.6% of the 152 companies listed on the that have reported earnings have beaten analysts’ expectations as compiled by Refinitiv.
The rose 82.05 points, or 0.23%, to 35,520.12; the S&P 500 lost 0.71 points, or 0.02%, at 4,566.75; and the dropped 17.27 points, or 0.12%, to 14,127.28.
Volume on U.S. exchanges was 9.92 billion shares, compared with the 10.32 billion average for the full session over the last 20 trading days.
The Dow seesawed but ended higher, underpinned by a gain in Boeing (NYSE:) after the planemaker posted a smaller-than-expected quarterly loss, along with a surge in cash flows. It marked its longest winning streak since 1987, with 13 straight days of gains.
Snap (NYSE:) sank 14.23% after the photo messaging app owner gave a weaker-than-expected third-quarter forecast as it struggles to compete with tech giants for advertising dollars.
Union Pacific (NYSE:) gained 10.42% after the railroad operator appointed Jim Vena as chief executive to succeed Lance Fritz.
Wells Fargo (NYSE:) climbed 2.11% after the bank’s board authorized a new share buyback program of up to $30 billion.
Advancing issues outnumbered decliners on the NYSE by a 1.75-to-1 ratio; on Nasdaq, a 1.64-to-1 ratio favored advancers.
The S&P 500 posted 29 new 52-week highs and no new lows; the Nasdaq Composite recorded 72 new highs and 92 new lows.
Read the full article here
