Wall Street ends higher, encouraged by Fed

2024-07-31 20:02:20

The New York Stock Exchange closed sharply higher on Wednesday, led by gains in technology stocks, after the Federal Reserve chairman said an interest rate cut in September could be in the cards if U.S. inflation continues to weaken.

The Dow Jones Industrial Average rose 0.24% to 40,842.79, the tech-heavy Nasdaq Composite Index rose 2.64% to 17,599.40, and the S&P 500 rose 1.58% to 5,522.

The U.S. Federal Reserve (Fed) kept interest rates unchanged at a high range of 5.25% to 5.50% on Wednesday, in line with market expectations.

Its chairman, Jerome Powell, confirmed that “if conditions are met, a rate cut could come as early as the September meeting of the Federal Open Market Committee (FOMC) Monetary Policy Committee.”

“The general feeling among the committee is that the economy is close to the time when it would be appropriate to cut interest rates,” he added at a news conference following the Fed’s meetings on Tuesday and Wednesday.

Bond markets reacted to the comments, sending the yield on the 10-year U.S. Treasury note down to 4.06% from 4.13% the day before.

The analyst stressed that even if there is progress on inflation, “it will not be enough as the Fed will not be able to lower interest rates at its meeting this week.”

Adam Sarhan summed it up: “The Fed is starting to get comfortable with the idea that they can get inflation under control. We are seeing the light at the end of the tunnel!”

Wall Street is off to a strong start ahead of the Federal Reserve’s monetary meeting, interrupting the portfolio rotation against technology that has occurred in recent sessions.

Technology stocks have regained strength.

Shares of artificial intelligence (AI) chip designer and market star Nvidia surged 12.81% to $117.02 after it was divided by 10 in early June.

This leap can also be explained by the good results announced by its rival AMD in the field of microprocessors dedicated to generating artificial intelligence, which once again indicates the booming development of this sector.

Its second-quarter revenue rose 9% to $5.8 billion. The group expects revenue of $6.7 billion for the current quarter.

Its profits soared 19%. AMD’s shares were last up 4.26% at $144.48 as the company said it doubled its activity related to data center equipment.

After several tumultuous sessions, all the big names in the sector regained color. Apple rose 1.50%, Amazon 2.90% and Tesla 4.25%.

Meta (Facebook) shares rose 2.51% to $474.83 before announcing a 73% increase in the group’s quarterly profit after the close.

After the close of electronic exchanges, shares of the group headed by Mark Zuckerberg rose another 3.69%.

On the Dow, Boeing Co. shares rose 2% to $190.60, hailing the appointment of new CEO Kelly Ortberg to succeed Dave Calhoun, who was embroiled in a production and supply quality control crisis experienced by the plane maker.

Mastercard rose 3.63% after reporting better-than-expected results and welcoming “strong consumer spending.”

Phone operator T Mobile rose 3.95 percent to $182.28 after reporting better-than-expected second-quarter revenue of $19.77 billion, up 3 percent from a year earlier.

Shares of the social network Pinterest fell 14.46% to $31.95 after the group disclosed a disappointing forecast for third-quarter activity.

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