Wall Street drifts higher ahead of Fed announcement
NEW YORK (AP) — Stocks are rising in early trading on Wall Street Wednesday ahead of a Federal Reserve announcement where investors expect the central bank to keep the accelerator floored on its aid for the economy.
The S&P 500 was 0.4% higher after the first 20 minutes of trading while Treasury yields were holding relatively steady and gold inched further into record territory. The Dow Jones Industrial Average was up 17 points, or 0.1%, at 26,397 as of 9:50 a.m. Eastern time, and the Nasdaq composite was up 0.7%.
Despite the modest moves, big events are crashing through the market, even beyond the tremendous pain created by rising coronavirus counts across much of the United States. The Fed is wrapping up a two-day meeting on interest rates, and most economists expect it to keep them at record lows. It already said a day before that it would continue several bond-buying programs through the end of the year to help support the economy.
Such aid, along with stimulus from Congress, helped launch the stock market’s turnaround in March. Congress is also locked in negotiations for more support for the economy, as $600 in weekly unemployment benefits are about to expire. Democrats and Republicans seem to remain far apart in their proposals, but investors are still hopeful about a deal’s chances.
It’s also a frenetic week for profit reports from the biggest U.S. companies. Several reported results for the spring that topped Wall Street’s expectations, even though they were far below last year’s levels from before the pandemic. That’s been the general trend so far this earnings season, with 40% of companies in the S&P 500 having reported.
Advanced Micro Devices jumped 12.7% for one of the market’s biggest gains after it reported an even bigger jump in profit from April through June than Wall Street expected. It also raised its forecast for revenue through 2020. It’s notable because many companies have been pulling their forecasts and declining to offer any given all the uncertainty in the economy created by the pandemic.
Analysts say investors are paying even more attention to companies’ forecasts and what they say about future business trends, when offered, than how they performed during the spring. Investors seem to be willing to look past the recent, steep drops in profit because of the pandemic that no one could have predicted.
Boston Scientific rose 3.4%, and Starbucks gained 4.5% after the companies offered their own better-than-expected results.
Big technology CEOs, meanwhile, are scheduled to testify at a House of Representatives subcommittee hearing on whether they’ve grown too big and harm competition.
Amazon, Apple, Facebook and Google’s parent company have been some of the market’s strongest stocks through the pandemic, much as they’ve been for the last several years, on investors’ expectations that they can continue to grow almost regardless of what the economy does.
Their stocks have grown so valuable that they can sway the S&P 500 and other indexes almost by themselves. Those four, plus Microsoft, account for nearly 22% of the S&P 500’s total value.
The big tech-oriented stocks have had a few stumbles in recent weeks, but they remain far ahead of the rest of the market.
Amazon added 0.6% Wednesday, Apple rose 0.8%, Facebook gained 0.8% and the Class A shares of Alphabet were up 0.4%.
The yield on the 10-year Treasury ticked down to 0.57% from 0.58% late Tuesday.
Gold extended its record run and rose 0.5% to $1,954.00 per ounce after touching $1,960.00 earlier in the morning.
Benchmark U.S. crude rose 0.7% to $41.31 per barrel. Brent crude, the international standard, gained 0.8% to $43.94 per barrel.
Overseas stock markets were mixed. The Nikkei 225 in Tokyo lost 1.1%, but stocks in Shanghai rose 2.1%. South Korea’s Kospi added 0.3%, and Hong Kong’s Hang Seng rose 0.4%.
Germany’s DAX lost 0.2%, and France’s CAC 40 rose 0.7%. The FTSE 100 in London added 0.3%.
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