US close: Stocks surge as Powell puts September cut on the table
Hawkish comments from the head of the Federal Reserve ignited US stocks on Wednesday with hopes rising for an interest-rate cut at the central bank's next meeting in September.
The S&P 500 jumped 1.6% to 5,522.30, while the Nasdaq surged 2.6% to 17,599.40. The Dow, however, only rose 0.2% to 40,842.79 with the index now just inches away from its all-time closing high of 41,198,08 reached on 17 July.
The Fed's two-day policy meeting concluded on Wednesday with no change in policy, as was widely anticipated, but chair Jerome Powell indicated that the central bank would be prepared to loosen monetary policy at its next meeting if price pressures continue to ease.
“A reduction in the policy rate could be on the table as soon as the next meeting in September,” Powell said. “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point.”
"As we expected, Chair Powell stopped short from fully committing to a rate cut in September, but at the same time conveyed that the Fed was almost there," said analysts at TD Securities. "While we think the bar is high for the Fed to cut by 50bp in September, we cannot discard the possibility that the Fed eases policy at each of the last three meetings of 2024 if inflation continues to come in better than expected."
Economic data floods in
On the macro front, US mortgage applications fell 3.9% in the fourth week of July, according to the Mortgage Bankers Association, extending the prior week's 2.2% drop to record the steepest weekly decline in almost two months. Applications to purchase a home fell by 1.5% for a third weekly decline in a row, while those to refinance a mortgage tanked by 7.2% week-on-week.
The Chicago purchasing managers index fell to 45.3 in July, according to the Institute for Supply Management. July's reading was down from a seven-month high of 47.4 in June but came in above analysts' expectations for a print of 44.8.
US private sector employment rose less than expected in July, according to figures released by ADP. Employment increased by 122,000 from June, versus expectations for a 150,000 jump. June’s gain was revised from 150,000 to 155,000. The service sector added 85,000 jobs, while the goods-producing sector saw a 37,000 increase.
Finally, pending home sales rose in June for the first time in the last three months, according to the National Association of Realtors, driven by an improvement in supply and a slight moderation in mortgage rates. The pending home sales index surged 4.8% month-on-month in June to 74.3, ahead of expectations for a 1.5% increase. On an annualised basis, pending home sales were down 2.6%.
Market movers
Advanced Micro Devices was up 4% after the chipmaker posted second-quarter results that topped consensus estimates.
The rest of the chip sector was also putting in impressive gains after Microsoft's results the day before, in which it indicated that it would continue to invest heavily in data centre infrastructure on the back of surging AI demand. Broadcom, Micron Tech, TSMC, ASML and Super Micro all surged during the session.
Meanwhile, Nvidia closed up 12%, rebounding after recent falls, after Morgan Stanley named the stock as a 'top pick'.
Boeing shares flew 2% higher on the back of its announcement that Robert Ortberg would take over as chief executive.
Image platform Pinterest tanked more than 14% despite beating forecasts with second-quarter results as the company disappointed with third-quarter guidance.
Dow Jones - Risers
Boeing Co. (BA) $190.60 2.00%
Dow Chemical Co. (DOW) $54.47 1.45%
Apple Inc. (AAPL) $222.08 1.43%
Caterpillar Inc. (CAT) $346.20 1.31%
Home Depot Inc. (HD) $368.16 1.23%
Verizon Communications Inc. (VZ) $40.52 1.20%
Visa Inc. (V) $265.48 0.98%
Nike Inc. (NKE) $74.86 0.73%
Goldman Sachs Group Inc. (GS) $509.03 0.66%
3M Co. (MMM) $127.55 0.63%
Dow Jones - Fallers
Johnson & Johnson (JNJ) $157.85 -2.16%
Microsoft Corp. (MSFT) $418.35 -2.08%
Merck & Co. Inc. (MRK) $113.13 -1.84%
Travelers Company Inc. (TRV) $216.44 -1.81%
Coca-Cola Co. (KO) $66.74 -1.39%
JP Morgan Chase & Co. (JPM) $212.80 -1.11%
Amgen Inc. (AMGN) $332.47 -0.94%
Walmart Inc. (WMT) $68.64 -0.79%
Procter & Gamble Co. (PG) $160.76 -0.58%
McDonald's Corp. (MCD) $265.40 -0.39%
S&P 500 - Risers
CenturyLink Inc. (LUMN) $3.15 17.98%
Arista Networks Inc. (ANET) $346.55 11.28%
Borg Warner Inc. (BWA) $35.31 8.81%
Eaton Corporation plc (ETN) $304.79 6.11%
Unum Group (UNM) $57.53 5.99%
Kraft Heinz Co. (KHC) $35.21 5.70%
Quanta Services Inc. (PWR) $265.38 5.48%
Broadcom Inc. (AVGO) $160.68 5.14%
Nvidia Corp. (NVDA) $117.02 4.87%
Hewlett Packard Enterprise (HPE) $19.91 4.73%
S&P 500 - Fallers
Humana Inc. (HUM) $361.61 -10.61%
Western Union Co. (WU) $11.89 -8.33%
Verisk Analytics Inc. (VRSK) $261.75 -7.77%
Marriott International - Class A (MAR) $227.30 -5.47%
CVS Health Corp (CVS) $60.33 -4.51%
Macerich Co (MAC) $16.01 -4.30%
Ipg Photonics Corp. (IPGP) $80.40 -4.22%
Skyworks Solutions Inc. (SWKS) $113.62 -3.75%
United Airlines Holdings Inc (UAL) $45.42 -3.29%
Altria Group Inc. (MO) $49.01 -3.05%
Nasdaq 100 - Risers
Kraft Heinz Co. (KHC) $35.21 5.70%
Broadcom Inc. (AVGO) $160.68 5.14%
Asml Holdings N.V. (ASML) $936.70 5.09%
Nvidia Corp. (NVDA) $117.02 4.87%
Starbucks Corp. (SBUX) $77.95 3.68%
Align Technology Inc. (ALGN) $231.88 3.54%
Hologic Inc. (HOLX) $81.61 3.49%
Cadence Design Systems Inc. (CDNS) $267.66 3.42%
KLA-Tencor Corp. (KLAC) $823.07 3.38%
T-Mobile Us, Inc. (TMUS) $182.28 3.08%
Nasdaq 100 - Fallers
Verisk Analytics Inc. (VRSK) $261.75 -7.77%
Marriott International - Class A (MAR) $227.30 -5.47%
Skyworks Solutions Inc. (SWKS) $113.62 -3.75%
Microsoft Corp. (MSFT) $418.35 -2.08%
Booking Holdings Inc. (BKNG) $3,715.01 -1.56%
Gilead Sciences Inc. (GILD) $76.06 -1.30%
Amgen Inc. (AMGN) $332.47 -0.94%
Incyte Corp. (INCY) $65.07 -0.91%
Baidu Inc. (BIDU) $88.57 -0.91%
Vertex Pharmaceuticals Inc. (VRTX) $495.72 -0.79%