Wall St ends higher as Fed keeps three rate cuts on the horizon

All three indexes were essentially completely flat until 2 pm. Then, at precisely 2 pm, all three took off like jackrabbits so it was at 2 pm that Powell gave his press conference which “while he didn’t necessarily go full dove, it was dovish vs recent market worries.”  The fears of a hawkish policy stance were laid to rest today and not only did the Fed announce the expected “no change in rates this month,” but bolstered the scenario of three cuts this year and Powell’s statements even downplayed the importance of recent hot inflation readings saying the numbers “haven’t really changed the overall story.” So everyone was happy and it was a good day, the Dow up over 400, the Nasdaq over 200.  Volume was a little below average at 11.67 billion. 

Wall St ends higher as Fed keeps three rate cuts on the horizon

By Sinéad Carew and Bansari Mayur Kamdar

Wed March 20, 2024 4:49 PM

DJ: 39,110.76  +320.33       NAS: 16,166.79  +63.34         S&P: 5,178.51  +29.09     3/19

DJ: 39,512.13  +401.37       NAS: 16,369.41  +202.62       S&P: 5,224.62  +46.11     3/20

March 20 (Reuters) - Wall Street's main stock indexes closed higher on Wednesday after the Federal Reserve eased investor jitters by keeping borrowing costs unchanged and reinforcing expectations that rates could be cut as many as three times this year.  The Fed's policy statement described inflation as remaining "elevated," and it raised economic projections for economic growth and lowered its projection for the unemployment rate from estimates it provided in December.  Stocks added to gains after Fed Chair Jerome Powell said in a press conference that despite recent inflation data coming in hotter than expected, the numbers "haven't really changed the overall story, which is that of inflation moving down gradually, on a somewhat bumpy road."  Strategists said Wall Street was reassured by Powell's comments on inflation and the labor market and his signal that the Fed will slow the pace of its drawdown of bond holdings.

"He said he wasn't trying to dismiss any data but he kind of gave the market a reason they could use to dismiss the data," said Alex Coffey, senior trading strategist at TD Ameritrade.  "We came in to this day feeling Jerome Powell might push back on market expectations or pivot away from dovish expectations since December because of the data we've had in the last two months," Coffey said. "While he didn't necessarily go full dove, it was dovish versus recent market worries."

The Dow Jones Industrial Average (.DJI), opens new tab rose 401.37 points, or 1.03%, to 39,512.13, the S&P 500 (.SPX), opens new tab gained 46.11 points, or 0.89%, to 5,224.62 and the Nasdaq Composite (.IXIC), opens new tab gained 202.62 points, or 1.25%, to 16,369.41.  Nine of the S&P's 11 major sectors advanced, with five of them climbing more than 1%. Consumer discretionary (.SPLRCD), opens new tab led the way with a 1.5% gain.  The health sector (.SPXHC), opens new tab was the weakest, falling 0.23%.

In healthcare, U.S.-listed shares of BioNTech dropped 4.4% after it reported a 2023 revenue and earnings plunge as it shifted focus to cancer drug development. Shares of COVID-19 vaccine makers Moderna (MRNA.O), opens new tab fell 1.9% while Novavax (NVAX.O), opens new tab dropped 2.2%.  The biggest boost to the consumer discretionary sector was Amazon.com (AMZN.O), opens new tab, whose shares gained 1.3%. Adding to this was Tesla (TSLA.O), opens new tab, which gained 2.5% after confirming to Reuters that it will raise the price of its China-produced Model Y vehicles by 5,000 yuan ($694.55) from April 1.  Also in the consumer sector, Chipotle Mexican Grill (CMG.N), opens new tab shares climbed 3.5% after the company said its board had approved a 50-for-1 split of common stock.  Equinix (EQIX.O), opens new tab shares eased 2.3% after Hindenburg Research said it has taken a short position in the data center operator.

Advancing issues outnumbered decliners by a 3.76-to-1 ratio on the NYSE which showed 633 new highs and 71 new lows.  The S&P 500 posted 81 new 52-week highs and one new low while the Nasdaq recorded 251 new highs and 101 new lows.

On U.S. exchanges, 11.67 billion shares changed hands compared with the 12.2 billion average for the last 20 sessions.