Market Exclusive

Unchanged Interest Rates Leave Stocks Confused, Metals Higher

Shares in the U.S. markets were little moved on Wednesday after the Federal Reserve decided to hold interest rates steady and failed to provide firm assurance about when it would raise rates if at all this year.

Most analysts and investors expected the Fed to behave the way it did, which is why there wasn’t anything really big to move the market when the central bank released the statement of its July policy meeting. Precious metals, however, skyrocketed.

The Fed noted in its statement that near-term risks to the U.S. economy have subsided. To some analysts, the statement meant that the Fed could move to review interest rates as early as September, but there is no assurance that any hike would be implemented at all by then.

The Fed’s comment that near-term economic risks have diminished come after a recent string of bullish economic data out of the U.S. labor, housing and retail sectors for the month of June. For instance, U.S. employers created far more jobs in June than economists had projected and hiring in the month was also significantly stronger than in the prior month.

But still, the Fed appears to be waiting to see the quality of economic data being reported in the coming months before it can decide to raise interest rates. Investors are pegging their hopes on at least one interest rate increase before the end of 2016, but mixed economic data in the coming months could delay such a move further.

How the indices performed

Without any major news coming out of the Fed’s July policy meeting, the Dow Jones Industrial Average (INDEXDJX:.DJI) pulled back about 0.1% to close the day at 18472.17. The blue-chip index posted a string of gains and record closings in the past week.

The Dow would have lost more than 0.1% on Wednesday had it not been for Apple Inc. (NASDAQ:AAPL) whose stock gains added some 44 points to the index. Apple beat expectations in the June quarter and also issued a stronger guidance for the current quarter than Wall Street was looking for.

The S&P 500 (INDEXSP:.INX) declined 0.1% after shedding 2.60 points to close at 2166.58. The loss in the index would have been wider if not for the support that came from technology sector. Energy and consumer companies led the S&P 500 lower on Wednesday. The losses in the energy sector were triggered by weaker oil prices after it emerged that crude oil stockpiles in the U.S. are gradually building up, raising fears of another round of price decay.

The NASDAQ Composite (INDEXNASDAQ:.IXIC) rose 0.6% after adding 29.76 points to close at 5139.81. Apple played a major role in lifting the tech-weighted index.

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