The Dow Jones Industrial Average and S&P 500 were both higher on Wednesday as traders awaited the Federal Reserve’s latest decision on monetary policy.
The 30-stock Dow rose 122 points, or 0.4%. The S&P 500 climbed 0.2%. The Nasdaq Composite struggled, falling 0.2% as shares of Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft were all under pressure. Those losses in Big Tech also capped the gains for the Dow and S&P 500.
FedEx released a blowout quarter with earnings $2.18 per share above analyst estimates, fueled by the e-commerce boom, sending the stock up more than 5%.
The Federal Open Market Committee will provide its quarterly update on its estimates for GDP, unemployment and inflation. The central bank could provide clearer guidance on what it will take to raise rates in the future. The Fed is also expected to keep rates unchanged.
Wednesday marks the Fed’s first decision since Chairman Jerome Powell unveiled a policy shift toward greater tolerance of inflation, effectively pledging to keep interest rates low for longer. Investors widely expect the central bank to maintain its downbeat stance on the economy. This will also be the last meeting before the U.S. presidential election.
“The Fed doesn’t like to be involved in politics, even though it’s inherently a political institution but two months before an election is a very difficult time to put your politics aside,” David Zervos, chief market strategist at Jefferies, said on CNBC’s “Closing Bell” on Tuesday. “You just have to expect that there’s going to be some thought to politics.
The central bank’s announcement will follow the release of disappointing U.S. retail sales, which rose less than expected last month.
Wall Street was coming off a session in which the S&P 500 and Nasdaq posted solid advances amid broad market gains. Real estate, consumer discretionary and tech all rose at least 1% on Tuesday.
Technology stocks continued their broad-based rally. The Nasdaq Composite rose 1.2%, bringing its week to date gain to more than 3%. The technology-heavy index dipped in correction territory last week and suffered its worst weekly performance since March.
“Optimism is being supported by a continual flow of good economic news, healthy earnings news and the prospect of getting more comforting news from the Federal Reserve tomorrow suggesting they remain committed to letting the recovery run hot while continuing to provide supportive policies,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
In corporate news, one of the hottest initial public offerings of 2020 will open for trading on Wednesday. Data storage software company Snowflake is priced at 30 times forward revenue and even got a rare vote of confidence from Berkshire Hathaway. Snowflake expects to go public at a share price between $100 and $110, according to an updated S-1 filing from Monday.
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