U.S. Stocks Gain After Fed Decision
December 11 2019 - 5:53PM
Dow Jones News
By Karen Langley and Avantika Chilkoti
Stocks rose after the Federal Reserve kept interest rates steady
and indicated no intention of raising them soon.
The Fed had been expected to neither raise nor lower its
benchmark interest rate, but major stock indexes still edged higher
after the rate announcement and an accompanying statement giving an
upbeat view of the economy. Stocks continued to rise as Fed
Chairman Jerome Powell said at a press conference that he expects
the economy to continue growing moderately.
The S&P 500 ended the day up 9.11 points, or 0.3%, at
3141.63. The Nasdaq Composite added 37.87 points, or 0.4%, to
8654.05. The Dow Jones Industrial Average, weighed down by declines
in shares of Chevron and Home Depot, reversed early losses to rise
29.58 points, or 0.1%, to 27911.30.
"It just gave more confidence to the market that the Fed is
going to be on the sidelines in 2020," said Hank Smith, co-chief
investment officer at Haverford Trust.
Investors are in the midst of a busy few days, with the U.S. and
European central banks holding policy meetings and providing fresh
assessments of economic indicators as well as a general election in
the U.K. that could prove to be a turning point for Brexit.
The Fed had cut interest rates at its past three meetings, but
officials Wednesday signaled that if their economic outlook holds,
rates can remain steady through 2020.
"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.
The WSJ Dollar Index hit its lowest closing value since July,
falling 0.3% to 90.27, after Mr. Powell said the Fed was unlikely
to raise rates until it sees a persistent rise in consumer prices.
Expectations that rates won't rise reduce the dollar's
attractiveness to yield-seeking investors.
Data released Wednesday showed consumer prices rose moderately
in November, indicating inflation has remained in check despite low
unemployment and the trade conflict with China.
Investors also continued to look for clues on the progress of
the U.S.-China trade talks, after the The Wall Street Journal
reported Tuesday that new U.S. tariffs on Chinese imports due to go
into effect on Dec. 15 may be delayed.
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 $1.66, or 1.4%, to $116.23 after the oil
company wrote down the value of its assets by more than $10 billion
and lowered its forecast for commodity prices.
Home Depot slid $3.90, or 1.8%, to $212 after forecasting fiscal
2020 same-store sales below Wall Street expectations. Shares of
Children's Place dropped $16.35, or 23%, to $54.31 after the
retailer's third-quarter sales missed analysts' estimates and it
reduced its revenue forecast. GameStop lost 98 cents, or 15%, to
$5.53 after the videogame retailer cut its financial guidance amid
worse-than-expected quarterly results.
The yield on the benchmark 10-year Treasury declined to 1.786%
from 1.833% Tuesday.
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 Karen Langley at karen.langley@wsj.com and Avantika
Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
December 11, 2019 17:38 ET (22:38 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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