Markets closed lower on Wednesday after the Fed at the end of its two-day policy meeting decided to keep interest rates unchanged and the monetary policy easy despite the economy strengthening. All the three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slipped 0.5% or 164.55 points to close at 33,820.38 points. Amgen, Inc. AMGN came up with disappointing quarterly results that weighed on the blue-chip index. Shares of Amgen plummeted 7.2%. Amgen carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 fell 0.1% or 3.54 point to close at 4,183.18 points. The index at one point of time hit an all-time high of 4,201.53 points.
Energy sector was the biggest gainer but most of the other sectors took a hit. The Energy Select Sector SPDR (XLE) gained 3.5%, while the Technology Care Select Sector SPDR (XLK) fell 0.9%. Six the 11 sectors of the benchmark index closed in negative territory.
The tech-heavy Nasdaq shed 0.3% or 39.19 points to end at 14,051.03 points.
The fear-gauge CBOE Volatility Index (VIX) was down 1.59% to 17.28. A total of 9.5 billion shares were traded on Wednesday, lower than the last 20-session average of 9.9 billion. Advancers outnumbered decliners on the NYSE by a 1.44-to-1 ratio. On Nasdaq, a 1.25-to-1 ratio favored adcancing issues.
Fed’s Decision Impacts Markets
Despite robust earnings from some big companies, stocks failed to rally on Wednesday. After finishing almost unchanged on Tuesday, markets somewhat bounced back in the afternoon session on Wednesday but couldn’t hold on to the momentum after Fed Chair Jerome Powell said that the central bank would leave the benchmark interest rates near zero.
He further said that the policy will remain unchanged for sometime although the economy is strengthening and inflation is rising. Powell further added that the vaccination drive has been helping the economy bounce back but the Fed would remain committed to keep its policy setting loose, at least till the time majority of the millions of jobs lost during the pandemic can be regained.
Indexes have been hovering around the all-time highs throughout the week but Powell’s announcement left investors somewhat confused as they failed to reassess if this is good news and how much of the good news has already been factored into the markets.
Investors Wait for Biden’s Speech
Investors also eagerly waited for President Joe Biden’s address to a joint session of Congress, where he was to share his detailed plans on childcare, spending on education and extension on some tax breaks.
The President was also scheduled to propose raising the capital-gains tax on the wealthiest Americans to 39.6% from 37% and for those who earn more than $1 million per year to 39.6% from 20%. The new rates are likely to raise 41.5 trillion over the next decade.
Economic Data
The Census Board said that trade deposit in goods jumped 4% in March for the third consecutive month to reach a record high of $90.6 billion.
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