27-7-2023 (NEW YORK) U.S. stocks closed with mixed results on Wednesday following the Federal Reserve’s decision to raise interest rates by 25 basis points, bringing the target range to 5.25 to 5.5 percent.
The Dow Jones Industrial Average recorded a gain of 82.05 points, or 0.23 percent, reaching 35,520.12. Conversely, the S&P 500 experienced a slight dip of 0.71 points, or 0.02 percent, settling at 4,566.75. The Nasdaq Composite Index declined by 17.27 points, or 0.12 percent, to finish at 14,127.28.
Among the 11 primary S&P 500 sectors, six ended in the red, with technology and materials sectors leading the losses, dropping 1.30 percent and 0.28 percent, respectively. On the other hand, communication services and industrials sectors led the gainers, rising by 2.65 percent and 0.66 percent, respectively.
The mixed performance in the U.S. stock market came after the conclusion of the Federal Reserve’s two-day policy meeting, where it announced its decision to raise interest rates to the highest level since 2001. The Fed’s benchmark federal funds rate was increased to a target range of 5.25 to 5.5 percent, making it the 11th interest rate hike since March 2022.
Federal Reserve Chair Jerome Powell, in a press conference, stated that the central bank will continue to assess data to determine the need for further policy tightening. This led to uncertainty among investors regarding the possibility of additional rate hikes.
“Today’s Fed meeting was one of the most certain and uncertain of the cycle,” remarked Gurpreet Gill, global fixed income macro strategist at Goldman Sachs Asset Management, in an interview with MarketWatch. The question of whether this marks the end of the current tightening campaign divides investors, as they await further guidance.
Experts noted that policymakers aim to avoid giving the impression that the tightening process is complete, but this message may be challenging to convey, particularly without updated forecasts. Craig Erlam, senior market analyst at OANDA, emphasized that the situation could be complex.
In addition to the Federal Reserve’s actions, investors were also focused on corporate earnings, particularly from major tech companies. Microsoft shares dipped 3.76 percent after issuing revenue guidance that fell short of analysts’ expectations. Meanwhile, Alphabet’s shares rose by 5.78 percent due to stronger-than-expected second-quarter earnings. Meta Platforms and eBay reported their numbers after the market closed.
The performance of big tech stocks has been selective, with investors rewarding companies that deliver robust results. David Bahnsen, chief investment officer at The Bahnsen Group, highlighted the non-correlation of stock prices in the big tech sector, signifying a shift in market dynamics.
