US close: Stocks rally following Powell conference
US stocks closed considerably higher on Wednesday following well-received quarterly numbers from tech giant Apple and chipmaker AMD.
At the close, the Dow Jones Industrial Average was up 1.77% at 25,014.86, while the S&P 500 had moved ahead 1.55% to 2,681.05 and the Nasdaq gained 2.20% to 7,183.08.
The Dow closed more than 430 points higher as two days of talks between US and Chinese delegates kicked off in Washington and the Fed made its latest rate announcement.
The Fed said it would be "patient" in future when determining what changes in monetary policy were needed to meet their objectives for growth and inflation, dropping the reference to a "gradual" pace of interest rate hikes.
The Federal Open Market Committee pointed to "global economic and financial developments" and "muted" inflation pressures as the justification for its change in bias.
During his post-meeting press conference, Fed chair, Jerome Powell, went on to indicate that policymakers now expected to stop shrinking the central bank's balance sheet sooner, as estimates of the level of reserves banks needed to hold had risen over the past year. Stocks hit session highs immediately after the conference.
In corporate news, Apple shares closed 6.83% higher following its results late on Tuesday.
David Cheetham, chief market analyst at XTB said the positive reaction in the stock was more down to the fact that expectations were low going into the event than a stellar report.
"Apple actually posted their first holiday-quarter decline in sales since 2001 but investors have seemingly looked through this to focus on slight beats on the expected earnings and revenues numbers and jumped in.
"Fears surrounding peak iPhone remain, with revenue from the handset tumbling by 15%, but CEO Tim Cook focused on a growing services business and rising sales of other devices to paint a more rosy picture. Mac revenue grew by 9%, while iPad sales climbed 17% as the smaller Wearables business, which includes the Apple Watch and AirPods, jumped by 50%."
Advanced Micro Devices surged 19.95% after the chipmaker said it swung to a profit in the fourth quarter and issued an upbeat outlook for full-year revenue.
Elsewhere, eBay shares closed 1.16% higher after the online marketplace retailer said it would pay its first quarterly dividend and delivered record fourth-quarter earnings.
AT&T was 4.33% weaker at the close as it undershot fourth-quarter phone subscriber estimates, while Tupperware tumbled 27.47% following the release of its fourth-quarter numbers.
Fast food behemoth McDonald's was 0.22% softer despite reporting better-than-expected earnings and revenues, boosted by solid international growth, as same-store sales were weaker than expected in the United States.
Boeing flew 6.25% higher after its quarterly numbers far surpassed expectations and issued some upbeat guidance for 2019.
After the bell, Tesla reported a revenue beat but an earnings miss in its fourth quarter, while software giant Microsoft also fell short on revenues. Both were weaker in after-hours trading.
On the data front, private sector employment in the US rose more than expected in January despite the longest government shutdown in history, according to data released by the ADP on Wednesday.
Employers added 213,000 jobs this month versus expectations for a 178,000 increase. Meanwhile, December's rise was revised down to 263,000 from 271,000.
Small businesses with fewer than 50 employees added 63,000 jobs, while medium-sized businesses with between 50 and 499 employees created an extra 84,000 jobs. Large companies with 500 or more employees recruited an extra 66,000 people
Elsewhere, contracts to buy previously owned US homes fell last month, according to the National Association of Realtors.
The NAR's pending home sales index for December fell to 99.0 - down 2.2% after November’s reading was revised to 101.2 from 101.4 in yet another sign of weakness in the housing market.
Economists had pencilled in 0.5% increase in home sales for December.