Traders work on the floor of the New York Stock Exchange on July 24, 2024.
Spencer Platt | Getty Images
Stocks rallied Wednesday after the Federal Reserve kept interest rates unchanged, as expected, while highlighting inroads against inflation. Traders also poured back into megacap tech as chip names soared.
The S&P 500 jumped 1.58% to close at 5,522.30, while the Nasdaq Composite popped 2.64% to 17,599.40. It was the best session since February for both indexes. The Dow Jones Industrial Average added 99.46 points, or 0.24%, ending at 40,842.79.
At session highs, the Dow was up 455.30 points, or 1.1%. The S&P 500 and Nasdaq were up as much as 2.1% and 3.2%, respectively, before paring those gains.
During Fed Chair Jerome Powell’s press conference Wednesday afternoon, he said if data continues to give the central bank confidence that inflation is slowing, it could be ready to move.
“If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” Powell said.
The Federal Open Market Committee struck a slightly more optimistic tone in its postmeeting statement, saying that in recent months, further progress has been made toward bringing inflation down closer to the central bank’s 2% target.
“The Fed used today’s statement to prepare markets for upcoming rate cuts. As inflation rates improve and unemployment increases, the Fed can cut rates yet keep the nominal funds rate above the inflation rate,” LPL chief economist Jeffrey Roach said in a note. “Markets will likely respond favorably to the subtle shift in tone.”
Jobs data released earlier Wednesday also hinted at a slowing economy and supported central bankers’ efforts to reduce inflation. Private job growth slowed further in July as the pace of wage gains dropped to a three-year low, according to the latest ADP report.
Megacap tech names made a comeback during Wednesday’s trading session. Nvidia shares gained 12.8%, clawing back some of this month’s losses as the stock posted its best day since Feb. 22. The chipmaker soared as better-than-expected results from rival Advanced Micro Devices stoked optimism in the semiconductor space. Other tech stocks such as Apple, Meta Platforms and Amazon were also higher. Microsoft, however, pulled back more than1% on disappointing quarterly cloud revenue.
Boeing added 2% after announcing a new CEO. The aerospace company also reported a wider-than-expected loss and disappointing revenue for the second quarter. Humana, meanwhile, slid 10.6% after posting weak guidance.
Even with tech’s revival on Wednesday, the Nasdaq Composite still ended July in the red, off about 0.8%. The S&P 500 advanced 1.1% for the month, while the Dow posted a 4.4% gain for its best month since December amid investors’ rotation into cyclical corners of the market.