Following the sharp pullback seen in the previous session, stocks showed a strong move back to the upside during trading on Wednesday. With the rally, the major averages largely offset Tuesday’s steep losses.
The major averages pulled back off their best levels going into the close but remained sharply higher. The Nasdaq surged 246.67 points or 1.4 percent to 17,750.79, the S&P 500 jumped 60.63 points or 1.1 percent to 5,675.29 and the Dow climbed 383.32 points or 0.9 percent to 41,964.63.
Stocks showed a notable rebound early in the session and saw further upside following the Federal Reserve’s monetary policy announcement.
The Fed announced its widely expected decision to once again leave interest rates unchanged, but projections signaled the central bank is still likely to lower rates later this year.
The Fed said it decided to maintain the target range for the federal funds rate at 4.25 to 4.50 percent in support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run.
At the Fed’s last meeting in late January, the central bank also left rates unchanged after it lowered rates by a total of 100 basis points or 1.0 percentage point over the three previous meetings.
The accompanying statement noted “uncertainty around the economic outlook has increased,” and the Fed said it is “attentive to the risks to both sides of its dual mandate.”
With regard to the outlook for rates, Fed officials still forecast rates in a range of 3.75 to 4.0 percent by the end of the year.
The forecast was unchanged from last December and suggests the Fed is likely to cut rates by a quarter point two times later this year.
Meanwhile, Fed officials lowered their projections for GDP growth in 2025 to 1.7 percent from 2.1 percent and raised their forecasts for consumer price growth this year to 2.7 percent from 2.5 percent.
The central bank also announced it has decided to slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion beginning in April.
“The Fed indirectly cut rates today by taking action to reduce the pace of runoff of its Treasury holdings,” said Jamie Cox, Managing Partner for Harris Financial Group. “The Fed has multiple things to consider in the balance of risks, and this move was one of the easiest choices.”
He added, “This paves the way for the Fed to eliminate runoff by summer, and, with any luck, inflation data will be in place where reducing the Federal Funds rate will be the obvious choice.”
Sector News
Airline stocks showed a strong move back to the upside after seeing significant weakness on Tuesday, with the NYSE Arca Airline Index soaring by 2.6 percent.
Significant strength was also visible among brokerage stocks, as reflected by the 2.4 percent surge by the NYSE Arca Broker/Dealer Index.
Computer hardware, networking and banking stocks also saw considerable strength, moving higher along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index dipped by 0.3 percent, while Hong Kong’s Hang Seng Index inched up by 0.1 percent.
The major European markets also ended the day mixed. While the German DAX Index fell by 0.4 percent, the U.K.’s FTSE 100 Index closed just above the unchanged line and the French CAC 40 Index climbed by 0.7 percent.
In the bond market, treasuries turned positive in reaction to the Fed announcement after seeing weakness for most of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 2.5 basis points to 4.256 percent after reaching a high of 4.323 percent.
Looking Ahead
Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including reports on weekly jobless claims, existing home sales and leading economic indicators.
Business News
U.S. Stocks Show Strong Move Back To The Upside Following Fed Announcement
2025-03-19 20:10:36
