S&P 500 Edges Higher As Fed Holds Rates Steady
April 28 2021 - 3:12PM
Dow Jones News
By Alexander Osipovich and Will Horner
Major U.S. stock indexes were little changed Wednesday after the
Federal Reserve said it would stick to the loose monetary policy
that has underpinned the market's rally in recent months.
The S&P 500 rose less than 0.1% in afternoon trading after
the Fed held its key interest rate near zero and said it would
continue bond purchases to support the economic recovery.
The Dow Jones Industrial Average declined 0.4%, while the
technology-heavy Nasdaq Composite slipped less than 0.1%.
In a press conference Wednesday, Fed Chairman Jerome Powell
stressed that recent gains in inflation had been due to transitory
factors and that the economy would need to make "substantial
further progress" before the U.S. central bank would begin tapering
asset purchases. That assured investors who have worried that the
Fed might shift to a more inflation-fighting posture.
"He is letting investors know exactly what they want to
hear--that he is going to be very supportive of markets for a very
long time," said Michael Arone, chief investment strategist at
State Street Global Advisors.
Stocks have been hovering near record levels as the corporate
earnings season has gotten off to a a better-than-expected start
and data has shown new signs of the economy recovering from the
Covid-19 pandemic. Still, there is some concern about President
Biden's planned tax increases and the surge in coronavirus cases in
India.
"The market [is waiting] to see whether we are going to get
another breakout in the economic data, how the recovery is
progressing and how much stimulus is going to go through," said
Willem Sels, global chief investment officer at HSBC Private Bank.
"We are seeing some trade-off between stronger earnings now, which
is a positive, and the fear that higher taxes to come could offset
that."
Investors are paying close attention to earnings this week,
including from some of the country's biggest technology companies.
Earnings must cross a high hurdle to support stocks' rich
valuations. They could also show how tech companies are coping with
changing consumer habits as lockdown restrictions ease.
Apple, Facebook and chip maker Qualcomm are expected to post
results after markets close, as is Ford Motor.
"There hasn't been a huge reaction to earnings. The market had
anticipated a lot of the improvement because it is reflective of
what is happening in the economic data," said Mr. Sels. "That is
why earnings season is all about whether there are new messages,
for example, around production and input costs."
Google's parent company Alphabet gained 3.9% after reporting
results late Tuesday. The tech giant posted record sales for the
first quarter, driven by digital ad spending.
Boeing fell 2.7%, weighing on the Dow, after the aircraft maker
reported its seventh consecutive quarterly loss and booked a charge
on its work replacing Air Force One presidential jets because of
problems with a supplier.
Spotify Technology slumped 10% after saying that user growth had
softened in the first quarter. Pinterest tumbled 14% after the
social media company added fewer users than analysts expected.
Texas Instruments slid 3.8% after the semiconductor maker said
it expected second-quarter revenue to be less than analysts had
been forecasting.
President Biden is set to outline some of his plans to raise
taxes on the highest earning Americans at a speech later Wednesday.
The plans are part of a $1.8 trillion proposal that includes new
spending on child care and education.
In bond markets, the yield on the 10-year Treasury note slipped
to 1.621%, from 1.622% Tuesday. Bond yields rise as prices
fall.
Overseas, the pan-continental Stoxx Europe 600 rose less than
0.1%. Among individual stocks, Deutsche Bank jumped more than 10%
after reporting its strongest quarterly earnings in seven
years.
Most major Asian markets posted gains. Japan's Nikkei 225 rose
0.2% while Hong Kong's Hang Seng added 0.5%. The Shanghai Composite
Index rose 0.4%.
Write to Alexander Osipovich at alexander.osipovich@dowjones.com
and Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
April 28, 2021 15:57 ET (19:57 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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