Wall Street ends higher as Fed holds key rate steady, focus turns to earnings

[NEW YORK] US stock indices advanced on Wednesday (Oct 28) after the US Federal Reserve left its key policy rate unchanged, as widely expected, shifting the probability of a rate hike to its next monetary policy meeting in December.

In its accompanying statement, the Fed upgraded its assessment of the economy while acknowledging inflation “remains elevated”. At the press conference following the release, Fed chair Kevin Warsh said the central bank has made clear its willingness and readiness to act.

“The Fed didn’t throw any curveballs,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “It was widely expected they’d hold, so no big surprise there.”

“Market participants are getting more used to (Warsh’s) style,” Detrick added.

Financial markets are pricing in an 87.4 per cent likelihood of a 25-basis point rate hike at the Fed’s December meeting, up from 78.3 per cent on Tuesday, according to CME’s FedWatch tool.

Rate hike forecasts could be swayed by data expected on Thursday, including the Commerce Department’s Personal Consumption Expenditures report – which includes the central bank’s preferred inflation gauge – and an advance take on third-quarter gross domestic product.

Third-quarter earnings season is in full swing, with 200 companies in the S&P 500 having posted results. Of those, 84 per cent have beaten consensus estimates, according to the most recent LSEG data.

Analysts estimate aggregate third-quarter S&P 500 earnings growth of 31.8 per cent year on year, up from 30.6 per cent as of Oct 1, per LSEG.

Memory chipmaker Micron Technology jumped after South Korean rival SK Hynix reported a more than sevenfold jump in quarterly profit. SK Hynix’s US-listed shares closed sharply higher.

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The Philadelphia SE Semiconductor index outperformed the broader market, notching its fourth consecutive daily gain and bouncing back from its recent sell-off, which was fuelled by worries regarding hyperscalers’ massive investment in artificial investment.

“I think the market realises what the Fed did today is one thing, but are AI expenditures continuing?“ Detrick said. “That’s what the market’s focused on.”

Microsoft and Alphabet are scheduled to report quarterly results after markets close.

According to preliminary data, the S&P 500 gained 25.43 points, or 0.33 per cent, to end at 7,748.03 points, while the Nasdaq Composite gained 83.42 points, or 0.3 per cent, to 26,561.24. The Dow Jones Industrial Average rose 126.21 points, or 0.24 per cent, to 52,503.78.

US crude prices climbed after Iran-backed Houthis attacked a refinery in Saudi Arabia, adding to supply worries. Since the Iran war began, oil prices have soared to over US$100 per barrel, pushing up costs in other areas of the economy and driving inflation higher.

Robinhood dipped after softness in cryptocurrencies dragged the trading platform’s third-quarter profit below analyst expectations.

Vertiv surged after the digital infrastructure firm topped quarterly expectations and raised its full-year profit and revenue forecasts.

Boston Scientific dropped after the medical device maker trimmed its annual profit forecast. REUTERS