May 18, 2024

Eurocean 2004

Life is an adventure

Fed Helps US Stocks to End Higher Wednesday

The Dow Jones Industrial Average closed at 33,015.37 on Wednesday with a gain of 189.42 points or 0.58{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The S&P 500 closed at 3,974.12 for a gain of 11.41 points or 0.29{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The Nasdaq Composite closed at 13,525.20 for a gain of 53.64 points or 0.40{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The VIX Volatility Index was lower at 19.23 for a loss of 0.56 points or -2.83{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.

Wednesday’s Market Movers

U.S. stocks turned higher Wednesday afternoon. All three major indexes ended the day with gains. The S&P 500 reported a new closing high and the Dow Jones moved above 33,000 for the first time.

The Federal Open Market Committee concluded its two-day policy meeting with no changes to monetary policy. Chairman Powell continued to maintain a dovish position for the Fed. However, new economic projections showed a bump in the 2021 gross domestic product projection from 4.2{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} to 6.5{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Projections also showed decreases in unemployment rate estimates and increases in inflation.

Regardless, the Fed continued to maintain no plans for any near-term policy changes. Moreover, the Fed’s dot plot does not show any potential for a federal funds rate increase until 2023. Currently, the rate was held at a target of 0{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} to 0.25{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Powell did suggest Wednesday that the Fed’s likely first move would be to adjust downward its $120 billion monthly asset purchases.

Holding steady on the federal funds rate as the economy is expected to improve could likely create more opportunity for mortgage and bond market rates to move higher, disconnecting somewhat from the Fed’s position. The yield on the 10-year U.S. Treasury ended the day at 1.63{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} versus 2.15{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} for AA corporate bonds.

In other news:

  • The MBA Mortgage Applications Index decreased -2.2{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} following a decrease of -1.3{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The MBA’s average 30-year mortgage rate increased to 3.28{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} from 3.26{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.
  • The Internal Revenue Service is planning to delay the April tax deadline to mid-May.
  • The February New Residential Construction report was released. Building permits decreased -10.8{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} following an increase of 10.7{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Housing starts decreased -10.3{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} following a decrease of -5.1{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.
  • The Treasury held auctions for 119-day bills at a rate of 0.040{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.
  • Crude oil inventory increased by 2.4 million barrels, according to the EIA’s Weekly Petroleum Status report. The EIA also believes crude oil prices will increase into April on lower OPEC production.

Across the board:

Small-Cap Stocks

In small-caps, the Russell 2000 closed at 2,336.39 for a gain of 16.87 points or 0.73{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The S&P 600 closed at 1,381.46 for a gain of 7.90 points or 0.58{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The Dow Jones U.S. Small-Cap Growth Index closed at 15,367.29 for a gain of 104.32 points or 0.68{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. The Dow Jones U.S. Small-Cap Value Index closed at 11,354.90 for a gain of 87.89 points or 0.78{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.

Other Notable Indexes

Other notable index closes included the S&P 400 Mid-Cap Index at 2,664.14 for a gain of 17.04 points or 0.64{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}; the S&P 100 at 1,802.18 for a gain of 4.79 points or 0.27{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}; the Nasdaq 100 at 13,202.38 for a gain of 50.10 points or 0.38{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}; the Russell 3000 at 2,399.71 for a gain of 7.60 points or 0.32{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}; the Russell 1000 at 2,246.58 for a gain of 6.41 points or 0.29{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}; the Wilshire 5000 at 41,894.70 for a gain of 129.83 points or 0.31{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}; and the Dow Jones US Select Dividend Index at 814.53 for a gain of 3.39 points or 0.42{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.

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About the author:

Julie Young

Julie Young is a financial writer with comprehensive experience in the financial services industry. She writes about investments, investment products, financial market news and economic trends. Julie has a Master of Science in finance from Boston College and a Bachelor of Science in finance from the University of Arkansas.