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Wall Street closes higher after Fed vows more support for the virus-battered economy
NEW YORK, July 30 — US stocks closed higher yesterday, adding to gains after the Federal Reserve repeated a pledge to use its “full range of tools” to support the economy but cautioned that the outlook “will depend significantly on the course of the virus.”
At the end of its two-day policy meeting the Fed said it will keep its interest rate target range until it is confident the economy has weathered the coronavirus pandemic and is on track for maximum employment and price stability goals.
While strategists said they found no surprising decisions after the meeting, many pointed out that the Fed’s focus on the virus highlighted the uncertainties it faces.
“The Fed is putting health again front and centre in its statement, which is impactful and meaningful, especially when we’re waiting on a bipartisan agreement on the fifth round of the CARES Act. It’s a bit ominous, to be frank,” said Nela Richardson, investment strategist at St. Louis-based Edward Jones.
But Richardson noted the “commitment to do whatever it takes to get the economy going again” and a recognition the economy has improved and “come up from the bottom.”
And with Fed confirmation of an extraordinarily uncertain path, “investors can feel certain that monetary stimulus is going to remain accommodative for the foreseeable future,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management.
The Dow Jones Industrial Average rose 160.29 points, or 0.61 per cent, to 26,539.57, the S&P 500 gained 40 points, or 1.24 per cent, to 3,258.44 and the Nasdaq Composite added 140.85 points, or 1.35 per cent, to 10,542.94.
All 11 major S&P sectors ended the day higher with the energy and financial sectors leading percentage gains.
Wall Street’s major indexes had already been higher before the Fed commentary as investors anticipated earnings reports due today from Amazon.com Inc, Facebook Inc, Apple Inc and Alphabet’s Google.
These companies were among the biggest boosts for Nasdaq even as the chief executives of all four companies also faced jabs from lawmakers at a congressional hearing on antitrust issues.
“You’ll often see an uptick in those shares ahead of earnings and if they disappoint then they tend to sell off,” said Citi’s Snyder.
Investors were also focused on contentious negotiations in Washington around what should go into government’s next coronavirus relief plan.
Of the S&P 500 firms that have reported results, 79.1 per cent have surpassed a low bar of quarterly profit expectations, according to Refinitiv IBES data.
Advanced Micro Devices Inc shares finished up 12.5 per cent after the chipmaker raised its full-year revenue forecast and boosted the Philadelphia chip index.
Starbucks Corp climbed 3.7 per cent after the coffee chain said business was “steadily recovering” worldwide and it would report a profit in the current quarter.
Boeing Co shares slipped after it slashed production of its biggest twin-engined jets and reported a bigger-than-expected loss due to the fallout from the pandemic.
Recent data pointed to a possible slowdown in business and hiring as several US states reimposed restrictions after a spike in Covid-19 infections, while deaths in the country caused by the disease surpassed 150,000 on Wednesday.
Advancing issues outnumbered declining ones on the NYSE by a 3.96-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favoured advancers.
The S&P 500 posted 40 new 52-week highs and no new lows; the Nasdaq Composite recorded 82 new highs and 16 new lows.
On US exchanges 9.78 billion shares changed hands compared with the 10.5 billion average for the last 20 sessions. — Reuters