Stocks rise after Fed decision

Date:

US stocks traded in the green on Wednesday, eyeing a bid for fresh 2023 highs, as investors dissected the Federal Reserve’s last interest rate decision of the year.

The benchmark S&P 500 (^GSPC), the tech-heavy Nasdaq Composite (^IXIC), and the Dow Jones Industrial Average (^DJI) each rose around 0.6% in the wake of the decision. The Dow and S&P 500 ended Tuesday at their highest since early 2022, with the Dow notching its third-highest close ever.

The Fed held its benchmark interest rate in a range of 5.25%-5.50%, the highest in 22 years, on Wednesday. The move had been widely anticipated by investors.

Also in the Fed’s release was the central bank’s Summary of Economic Projections, which includes central bankers projections for interest rates next year. The Fed now sees 75 basis points of rate cuts coming in 2024, which accounts for one more rate cut than had been projected in September.

Fed Chair Jerome Powell will have a press conference at 2:30 p.m. ET.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Elsewhere, oil rose to come off the lowest levels since June as the market weighed the COP28 deal to transition away from fossil fuels. West Texas Intermediate (CL=F) and Brent crude futures (BZ=F) both added roughly 1%, trading around $69 a barrel and $74 a barrel, respectively.

In individual corporates, Tesla (TSLA) shares slipped after the EV maker recalled over 2 million cars to fix an Autopilot safety flaw and said some of its Model 3 vehicles will lose a US consumer tax credit.

 

Live12 updates

  • Fed sees lower inflation, additional rate cuts in 2024

    The Federal Reserve’s latest Summary of Economy Projections showed the Central Bank sees inflation falling faster than previously forecasted.

    The Fed now sees its preferred inflation gauge, core Personal Consumption Expenditures (PCE), falling to 2.4% in 2024. Originally, the Fed had seen inflation hitting 2.6% in 2024. Core PCE excludes the volatile food and energy categories.

    With inflation falling faster than expected, the Federal Reserve upped its expectations for rate cuts in 2024. The Fed now sees 75 basis points of cuts next year, up from a previous forecast of two rate cuts in 2024.

    Below is a full breakdown of how the Fed’s projections shifted from September to December.

    The Fed now sees Core Personal Expenditures (PCE), which excludes the volatile food and energy categories, falling to 2.4% in 2024.The Fed now sees Core Personal Expenditures (PCE), which excludes the volatile food and energy categories, falling to 2.4% in 2024.

    The Fed now sees Core Personal Expenditures (PCE), which excludes the volatile food and energy categories, falling to 2.4% in 2024. (Federal Reserve)

  • Fed holds rates steady, project an additional rate cut in 2024

    The Federal Reserve held its benchmark interest rate in a range of 5.25%-5.50%, the highest in 22 years, on Wednesday. The move had been widely anticipated by investors.

    Also in the Fed’s release was the central bank’s Summary of Economic Projections, which includes central bankers projections for interest rates next year. The Fed now sees 75 basis points of rate cuts coming in 2024, which accounts for one more rate cut than had been projected in September.

    Stocks, which had been flat entering the 2 p.m. ET announcement, moved higher after the release.

    The Nasdaq Composite (^IXIC) popped about 0.4% while the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) rose about 0.5%.

  • One chart to watch post Fed

    Over the past month investor expectations for a rate cut in March moved up significantly.

    As of Wednesday, investors are placing a roughly 47% chance the Fed cuts rates by the end of the March meeting, per the CME FedWatch Tool. A month ago, investors had placed less than a 11% chance on a Fed cut by the end of the March meeting.

    After the Wednesday’s meeting, CME projections will be one way to track how market participating are digesting Fed chair Powell’s commentary and if the Fed agrees with the recent market sentiment that cuts will come sooner than expected.

    Entering the Federal Reserve's December meeting, investors are placing a 47% chance that the central bank cuts interest rates by the end of the December meeting.Entering the Federal Reserve's December meeting, investors are placing a 47% chance that the central bank cuts interest rates by the end of the December meeting.

    Entering the Federal Reserve’s December meeting, investors are placing a 47% chance that the central bank cuts interest rates by the end of the December meeting. (Yahoo Finance)

  • Trending tickers on Wednesday

    Before the Federal Reserve takes hold of the market action, some single stock stories have caught investor attention on Wednesday.

    Pfizer (PFE) stock leads the Yahoo Finance Trending Tickers page as shares fell roughly 8%, nearly hitting its lowest levels during March 2020. The company announced on Wednesday it expects full-year 2024 earnings per share to come in at $2.05-$2.45, $0.40 per share below its prior forecasts.

    Tesla (TSLA) shares fell about 3% as the electric vehicle-maker plans to a recall of more than two million vehicles. The recall comes following an investigation by the National Highway Traffic Safety Administration that found Tesla’s autopilot driver-assistance system doesn’t do enough to protect from incidents.

    Etsy (ESTY) shares slipped more than 5% as the company announced it will cut 11% of its workforce.

    Shares of United States Steel (X) rose roughly 5% after CNBC’s David Faber reported that the company’s board is set to meet today to discuss multiple bids to buy United States Steel. Faber noted that multiple of those bids are at “excess of $40 per share” and one of them is coming from Cleveland Cliffs (CLF).

  • The ‘bar is high’ for stocks during today’s Fed meeting

    Stocks have ripped higher since the Fed’s last meeting on Nov. 1. The S&P 500 rose over 9% between meetings, its largest increase between two Federal Reserve meetings since 2009, according analysis from Bespoke Investment Group.

    To eToro US investment analyst Callie Cox this means the “bar is high” for stocks to move up as Fed Chair Powell speaks on Wednesday.

    Increased confidence that the Federal Reserve is done hiking interest rates and cuts could come sooner than initially thought drove the major averages higher into the December Fed meeting.

    On Wednesday, investors will be looking for affirmation of that narrative both in Powell’s commentary and within the latest “dot plot,” which will project how many rate cuts Fed officials see happening in 2024.

    A chart from Cox also showed that the moves in stocks coincided with the second-largest drop in the 10-year Treasury yield (^TNX) seen between meetings since March 2020.

    Stocks soared and bond yields tumbled in between the November and December Fed meetings as investors grew increasingly confident that the central bank is done hiking interest rates.Stocks soared and bond yields tumbled in between the November and December Fed meetings as investors grew increasingly confident that the central bank is done hiking interest rates.

    Stocks soared and bond yields tumbled in between the November and December Fed meetings as investors grew increasingly confident that the central bank is done hiking interest rates. (eToro, Bloomberg)

  • More promising inflation news for the Federal Reserve

    The inflation picture keeps improving.

    New data from the Bureau of Labor Statistics out Wednesday showed Producer Prices increased less than economists had projected in the month of November.

    The “core” Producer Price Index (PPI) showed prices excluding the volatile food and energy categories were flat in November compared to the month prior, lower than 0.2% increase economists had expected. On a yearly basis, core prices rose 2%, below estimates for a 2.2% increase.

    This, according to economists, will be a welcome sign for the Federal Reserve as lower PPI should mean the Fed’s preferred inflation gauge, core Personal Consumption Expenditures (PCE), will come in lower than initially expected for the month of November.

    “Based on inputs from yesterday’s Consumer Price Index and today’s Producer Price Index, we estimate that core PCE will barely rise 0.1% over the month,” Renaissance Macro Research head of economics Neil Dutta wrote on Wednesday. “If that is right, over the last six months, core PCE would have gone up just 2.1% at an annual rate. In other words, we are right there [near the Fed’s 2% inflation target].

    “The Fed will need to revise down its inflation estimates for 2023, but the momentum going into next year implies a bit of downside there too.”

    To Dutta, the promising inflation news could mean more Fed interest rate cuts than initially expected in 2024, too.

  • United States Steel rises as bids to purchase company reach above $40 per share

    Further speculation on a deal to buy United States Steel (X) is sending shares higher on Wednesday.

    The stock popped more than 3% after CNBC’s David Faber reported that the company’s board is set to meet today to discuss multiple bids to buy United States Steel.

    Faber noted that multiple of those bids are at “excess of $40 per share” and one of them is coming from Cleveland Cliffs (CLF).

    United States Steel stock has soared since Cleveland Cliffs announced it made an offer to buy US Steel in August.United States Steel stock has soared since Cleveland Cliffs announced it made an offer to buy US Steel in August.

    United States Steel stock has soared since Cleveland Cliffs announced it made an offer to buy US Steel in August.

  • Pfizer shares near COVID lows after guidance cut

    Pfizer (PFE) stock has round-tripped from its pandemic-era highs and is threatening its lowest levels since 2020 with Wednesday’s drop.

    The company announced on Wednesday it expects full-year 2024 earnings per share to come in at $2.05-$2.45, a full $0.40 per share below its prior forecasts. Pfizer’s effective tax rate is also expected to climb, while offering revenue forecasts below Street estimates.

    Pfizer said Wednesday that sales for its COVID-19 vaccine and COVID-19 treatments would total about $8 billion next year. Reuters noted Wednesday that analysts had expected combined sales for this category to reach $13 billion.

    The stock was down as much as 9% in early trading on Wednesday, briefly falling below $26 per share. The stock reached a low of $23.39 in March 2020 as markets crashed in the early days of the COVID-19 pandemic.

    Back out some of the pandemic-induced panic-selling lows reached in March 2020 and you’d have to go back to the fall of 2017 to find Pfizer stock trading near current levels.

    Should shares settle near Wednesday morning’s lows on a weekly basis, Pfizer’s lows reached in February 2016 would be in play, according to Yahoo Finance data.

    Source: Yahoo FinanceSource: Yahoo Finance

    Source: Yahoo Finance

  • Tesla stock slips after autopilot recall

    Tesla (TSLA) is recalling more than two million vehicles after a US road safety regulator deemed its autopilot driver-assistance system doesn’t do enough to protect from incidents.

    Shares of the EV maker were down more than 1% on the news, which follows a year-long investigation from the National Highway Traffic Safety Administration.

    The NHTSA said in the recall notice said then when Autosteer is engaged and the driver isn’t paying attention or is unable to intervene with the Autosteer function there “may be an increased risk of crash.”

    This is not the first time Tesla has had to recall cars due to issues with automated self-driving technology. Earlier this year Tesla stock fell more than 5% in a single day after issuing a recall due to issues with its Full-Self Driving beta software.

  • Stocks open roughly flat with most market action expected in the afternoon

    Stocks opened Wednesday’s trading day marginally higher as investors awaited the latest policy update from the Federal Reserve.

    The Nasdaq Composite (^IXIC) popped about 0.1% while the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) teetered on both sides of the flat line.

    With the policy update expected at 2 p.m. ET followed by a press conference with Federal Reserve chair Jerome Powell at 2:30 p.m. ET, most of the market volatility is expected to come in the final 90 minutes of trading on Wednesday as listen for clues on when the Federal Reserve may cut interest rates.

    Analysis from Bespoke Investment Group shows most of the market action during Fed days has come after 2:30 p.m. ET. Analysis from Bespoke Investment Group shows most of the market action during Fed days has come after 2:30 p.m. ET.

    Analysis from Bespoke Investment Group shows most of the market action during Fed days has come after 2:30 p.m. ET. (Bespoke Investment Group)

  • Investors eye record highs for Dow, S&P 500

    The major US stock market indexes have had a stellar year, led by the Nasdaq Composite’s (^IXIC) nearly 40% advance.

    But as 2023 wraps up, investors will be keeping a close watch on potential record closes for the Dow Jones Industrial Average (^DJI) and the benchmark S&P 500 (^GSPC).

    On Tuesday, the Dow notched its third-highest close on record, settling at 36,577.94. The blue chip index is just about 120 points, or less than 1%, away from its record closing high of 36,799.65 reached on Jan. 4, 2022.

    Meanwhile, the S&P 500 closed at 4,643.70 on Tuesday, just over 3% away from its closing record high of 4,796.56 reached on Jan. 3, 2022.

    The Nasdaq, for its part, settled at 14,533.40 on Tuesday, closer to 10% away from its record high of 16,057.44 reached in Nov. 2021.

    As Yahoo Finance’s Josh Schafer reported Tuesday, the Federal Reserve holding interest rates steady has been the best environment for stocks when compared to periods just before or after the Fed either raises or lowers rates. And with the Fed expected to remain on hold Wednesday — and possibly into the second or third quarter of 2024 — market history remains on the side of the bulls.

  • All eyes on the Fed on decision day

    The Federal Reserve is widely expected to hold interest rates steady this Wednesday at the end of the central bank’s last policy meeting of 2023.

    Investors will listen out for any sign that the most aggressive rate-hiking campaign since the 1980s is over when the policy decision comes at 2 p.m. ET.

    FILE - Federal Reserve Chairman Jerome Powell is introduced at the Jacques Polak Research Conference at the International Monetary Fund, Thursday, Nov. 9, 2023, in Washington. The Fed is set to leave interest rates unchanged while facing speculation about eventual rate cuts. (AP Photo/Mark Schiefelbein, File)FILE - Federal Reserve Chairman Jerome Powell is introduced at the Jacques Polak Research Conference at the International Monetary Fund, Thursday, Nov. 9, 2023, in Washington. The Fed is set to leave interest rates unchanged while facing speculation about eventual rate cuts. (AP Photo/Mark Schiefelbein, File)

    Fed Chair Jerome Powell (AP Photo/Mark Schiefelbein) (ASSOCIATED PRESS)

    Fed Chair Jerome Powell is expected to play down the prospect of a rate cut anytime soon, even as some traders bet on a pivot as early as March.

    Read this to find out what market observers are watching from the Fed, from Yahoo Finance’s Jennifer Schonberger.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

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