U.S. Stocks Gain After Fed Decision
December 11 2019 - 3:07PM
Dow Jones News
By Avantika Chilkoti and Karen Langley
U.S. stocks edged higher Wednesday after the Federal Reserve
announced it was holding its benchmark interest rate steady and
signaled no appetite to raise it soon.
The S&P 500 was up 0.2% and the Nasdaq Composite up 0.3%,
slightly higher than their levels before the announcement. The Dow
Jones Industrial Average, weighed down by declines in shares of
Chevron and Home Depot, reversed earlier losses to be up less than
0.1%.
Fed officials in their policy statement expressed an upbeat view
of the economy, with new projections showing most officials believe
rates are low enough to stimulate growth.
Investors are in the midst of a busy few days as the U.S. and
European central banks hold policy meetings that will provide fresh
assessments of key economic indicators, as well as a general
election in the U.K. that could prove to be a turning point for
Brexit.
The Fed's decision to hold rates steady had been expected. The
U.S. central bank had cut interest rates at its past three
meetings, but Chairman Jerome Powell had indicated both that there
is a very high bar for the Fed to raise rates and that the economic
outlook would need to weaken materially to consider lowering them
further.
"I do think we're finally at the point where maybe monetary
policy will become less of what we need to watch, and instead it
will be more focused on the company fundamentals and the
fundamentals of the economy, " said Ron Temple, head of U.S. equity
at Lazard Asset Management.
Meanwhile, fresh data Wednesday showed consumer prices rose
moderately in November, indicating inflation has remained in check
despite historically low unemployment and the trade conflict with
China. The inflation numbers aren't likely to sway the Fed's
interest-rate decision.
Investors were also continuing to parse headlines for
indications on the progress of the U.S.-China trade talks, after
the The Wall Street Journal reported Tuesday that negotiators from
both sides were preparing to delay fresh U.S. tariffs on Chinese
imports due to go into effect on Dec. 15.
Some analysts remain concerned that existing tariffs imposed on
Chinese imports are already starting to hurt the U.S. economy.
"It's going to come home to roost for the one element of the
U.S. economy that has always, always, always pulled the economy out
of any slump and that's the U.S. consumer," said Matt Cairns, a
rates strategist at Rabobank.
Shares of Chevron fell 1.3% after the oil giant wrote down the
value of its assets by more than $10 billion and lowered its
forecast for commodity prices.
Home Depot dropped 1.8% after forecasting fiscal 2020 same-store
sales below Wall Street expectations. Shares of Children's Place
declined 24% after the retailer's third-quarter sales missed
analysts' estimates and it reduced its revenue forecast. GameStop
declined 18% after the videogame retailer cut its financial
guidance following worse-than-expected quarterly results.
The yield on the benchmark 10-year Treasury was 1.802%, down
from 1.833% Tuesday.
In Europe, the U.K.'s FTSE 250 equity index slipped 0.6% ahead
of a general election scheduled for Thursday that will help
determine the course of the U.K.'s withdrawal from the European
Union.
Some opinion polls show Prime Minister Boris Johnson's lead
narrowing, and a new, closely watched YouGov poll couldn't rule out
a hung Parliament. It showed that Mr. Johnson's Conservative Party
is set to win a majority of 28 seats, down from a 68-seat majority
forecast in a survey last month.
The state-backed oil major Saudi Arabian Oil Co., which was
among the most closely watched stocks, gained 10% by the close of
trading in Riyadh. That was the upper limit for the stock, which
made its debut after the world's largest initial public
offering.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and
Karen Langley at karen.langley@wsj.com
(END) Dow Jones Newswires
December 11, 2019 14:52 ET (19:52 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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