Wall Street stocks edged up, US Treasury debt yields fell, and oil prices rose to the highest level of the year after the Federal Reserve signalled it was in no hurry to change policy.
The Fed’s policy interest rate target was left unchanged at 0.25 per cent to 0.5 per cent as expected, and the US central bank expressed confidence in the US economic outlook, leaving the door open to an interest rate rise in June, but gave no indication it felt the need to hike.
The Fed said the labour market had improved further despite slow economic growth, and added that it was keeping a close eye on inflation, while removing references to worries about the global economy from its statement.
The S&P 500 index and Dow Jones Industrial Average ended higher for the day after the Fed statement, but the Nasdaq fell on disappointing earnings from Apple and Twitter late Tuesday, and the index has lost nearly 5.0 per cent in the past week.
“The big takeaway here is they (the Fed) continued to be positive on the domestic economy,” said John Bailer, senior portfolio manager at The Boston Company Asset Management.
“They have taken out some of the risk on the global economy.”
The Dow Jones industrial average rose 51.23 points, or 0.28 per cent, to 18,041.55, the S&P 500 gained 3.45 points, or 0.16 per cent, to 2,095.15 and the Nasdaq Composite dropped 25.14 points, or 0.51 per cent, to 4,863.14.
Apple shares closed down 6.3 per cent after the company reported its first drop in iPhone sales and its first decline in revenue in more than a decade.
Twitter tumbled more than 16 per cent after quarterly revenue lagged expectations.
The Nasdaq’s information technology sector fell 1.4 per cent, with Facebook and Alphabet also lower.
Longer-dated US Treasury debt yields fell on Wednesday for the first time in seven days, after the Fed left the door open for an interest rate rise but signalled its rate hike path still would be a very gradual one.
The 30-year yield fell five basis points to 2.707 per cent after reaching its highest since early February at 2.764 per cent on Tuesday.
“It’s a very close call in what they do in June. It’s contingent on the jobs, inflation and wage data, which may or may not confirm their economic outlook,” said Bill Irving, portfolio manager at Fidelity Investments in Merrimack, New Hampshire.
Interest rates futures implied traders see about a one in five chance of a rate hike at the June 14-15 Fed meeting, little changed from Tuesday, CME Group’s FedWatch program showed.
The US dollar ended slightly lower against the euro, and was last down 0.1 per cent against a basket of major currencies to 94.510.
The dollar was slightly higher against the yen, last up 0.2 per cent against the Japanese currency at 111.40 yen.
Oil prices rose, with Brent crude, the international benchmark, up 3.3 per cent to $US47.23, its highest since early November.
US crude rose 2.75 per cent to $US45.33 a barrel and had earlier rallied on expectations for a drop in crude oil inventories, but US crude inventories rose sharply, reducing oil’s gains.
“Bullish momentum from a technical perspective, in cahoots with dovish Fed rhetoric, has this market on fire again despite the crude inventories we’re seeing,” said Matt Smith, director of commodities research at New York-based Clipperdata.
