Market Wrap: Stocks End Higher as Investors Shrug Off Fed

Reuters
Updated
Financial Markets Wall Street
Richard Drew/AP

By Noel Randewich

NEW YORK -- U.S. stocks finished stronger Wednesday after the Federal Reserve said the economy and job market continued to strengthen and left its key interest rate unchanged.

The central bank's comments on the economy and inflation after its two-day pow-wow appeared to do little to drastically change wide expectations that the first rate hike will come in September or possibly December.

%VIRTUAL-pullquote-The statement tried to just give an update on the state of the economy, which is showing some modest improvement.%No move on rates was expected this week. U.S. interest rates have remained near zero for almost a decade and the Fed has said it will raise rates once it sees a sustained recovery in the economy.

"The statement tried to just give an update on the state of the economy, which is showing some modest improvement," said Guy Haselmann, head of U.S. interest rate strategy at Scotiabank in New York. "They were trying not to create extra volatility in a market already on edge."

The Dow Jones industrial average (^DJI) rose 0.7 percent to end at 17,751.39. The Standard & Poor's 500 index (^GSPC) gained 0.7 percent to 2,108.57 and the Nasdaq composite (^IXIC) added 0.4 percent to finish at 5,111.73.

All 10 major S&P sectors were higher with the energy index's 1.3 percent rise leading the way.

The S&P 500 has bounced about 2 percent higher in the past two days following a deeper near-3 percent drop over the preceding week that had been caused in part by a rout in China's stock markets.

With second-quarter earnings season more than halfway done, analysts now expect overall earnings of S&P 500 companies to edge up 0.8 percent and revenue to decline 3.9 percent, according to Thomson Reuters data.

While earnings are expected to increase this quarter, valuations remain a concern. The S&P 500 is trading near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.

Stocks in the News

After the bell, Facebook (FB) and Whole Foods Market (WFM) dropped 4 percent and 11 percent, respectively, following quarterly reports that left investors wanting more.

During the session, Twitter (TWTR) shares fell 14.5 percent to a year-low of $31.24 after the microblogging company said its number of monthly average users rose at the slowest pace since it went public in 2013.

General Dynamics (GD) rose 3.9 percent after its earnings. It sparked a sector-wide rally across major aerospace stocks including Northrop Grumman (NOC), Spirit Aerosystems (SPR), Lockheed Martin (LMT) and TransDigm Group (TDG).

Cytec Industries (CYT) soared 27.1 percent after Belgian chemical group Solvay agreed to buy the company for $5.5 billion.

Advancing issues outnumbered declining ones on the NYSE by 2.69 to 1. On the Nasdaq, the ratio was 1.28 to 1. The S&P was chalked up 26 new 52-week highs and 1 low; the Nasdaq posted 43 new highs and 62 lows. Some 7.2 billion shares changed hands on U.S. exchanges, above the daily average of 6.7 billion so far this month, according to BATS Global Markets.

What to watch Thursday:

  • At 8:30 a.m. Eastern time, the Commerce Department releases second-quarter gross domestic product, and the Labor Department releases weekly jobless claims.

  • Freddie Mac releases weekly mortgage rates at 10 a.m.

Earnings Season
These selected companies are scheduled to release quarterly financial results:

  • Amgen (AMGN)

  • Anheuser-Busch Inbev (BUD)

  • Astrazeneca (AZN)

  • Automatic Data Processing (ADP)

  • Bunge (BG)

  • Cigna (CI)

  • Colgate-Palmolive (CL)

  • ConocoPhillips (COP)

  • Deutsche Bank (DB)

  • Diageo (DEO)

  • Electronic Arts (EA)

  • Expedia (EXPE)

  • Fiat Chrysler Automobiles (FCAU)

  • Hanesbrands (HBI)

  • Invesco (IVZ)

  • LinkedIn (LNKD)

  • Marathon Petroleum (MPC)

  • Mondelez International (MDLZ)

  • Nokia (NOK)

  • Procter & Gamble (PG)

  • Royal Dutch Shell (RDS-A)

  • Sanofi (SNY)

  • Sony (SNE)

  • Stanley Black & Decker (SWK)

  • Starwood Hotels & Resorts Worldwide (HOT)

  • T-Mobile US (TMUS)

  • Teva Pharmaceutical Industries (TEVA)

  • Time Warner Cable (TWC)

  • Valero Energy (VLO)

  • Western Union (WU)

  • Xcel Energy (XEL)

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