Wall Street rises as yields fall after Fed rate decision

A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, United States, on October 27, 2023. - Reuters
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, United States, on October 27, 2023. – Reuters

Wall Street rose on Wednesday as investors were hopeful the Federal Reserve would keep interest rates unchanged later in the day, while megacap stocks got a boost from a drop in bond yields following the US Treasury Department’s refund plans.

The Fed’s policy announcement is expected at 1400 ET (1800 GMT), but investors will focus on Chairman Jerome Powell’s conference call after the statement to gauge how long the central bank can keep rates high.

A series of economic data, including a smaller-than-expected increase in US private payrolls in October and a sharp contraction in manufacturing activity, have raised expectations that the central bank may avoid further policy tightening this year.

“The ADP (private payrolls) numbers are a sign of an economy that is not collapsing, but still not very strong, which plays into the thinking that the Federal Reserve will remain on hold,” said senior portfolio manager Robert Pavlik. Dakota Wealth in Fairfield, Connecticut.

Traders’ bets for a rate hike of 25 basis points in December fell to 20.8% from 28.8% after the previous day’s data, according to CME Group’s FedWatch tool.

Meanwhile, the Treasury Department said it would slow the pace of increases in its long-term debt auctions in the November-January quarter.

The yield on the benchmark 10-year note fell below 4.8% for the first time in two weeks following the announcement.

Pavlik said, “Yields are low because refinancing is not as much as people feared. When the government has to borrow more money than people think, it creates problems for the bond market.”

Megacap growth stocks including Microsoft, Nvidia and Amazon.com rose between 1.7% and 2.6%.

Seven of the 11 major S&P 500 sectors were trading higher, with information technology and communications services leading the way.

The Fed’s stance on interest rates will determine the direction for US equities after a sharp decline in October due to a rise in Treasury yields, the Middle East conflict and a mixed earnings report.

CVS Health fell 2.7% after the healthcare company cut its 2024 earnings forecast, while Estée Lauder fell 17.0% after the beauty products maker cut its annual profit outlook.

Overall, according to LSEG data, analysts expect earnings for S&P 500 companies to grow 5% in the third quarter.

Investors also assessed the Labor Department’s JOLTS report, which showed U.S. job opportunities remained high in September.

At 11:44 a.m. ET, the Dow Jones Industrial Average was up 121.27 points, or 0.37%, at 33,174.14, the S&P 500 was up 23.07 points, or 0.55%, at 4,216.87, and the Nasdaq Composite was up 84.91 points, or 0.66%. %, at 12,936.15.

Among other stocks, payroll processor Paycom Software fell 37.8% after reporting a decline in fourth-quarter revenue.

Tinder owner Match Group fell 16.9% after reporting lower-than-expected fourth-quarter revenue.

Advancing issues on the NYSE outnumbered declining ones by a 1.74-to-1 ratio. Declining issues outnumbered advancing ones on the Nasdaq by a 1.19-to-1 ratio.

The S&P index recorded seven new 52-week highs and 24 new lows, while the Nasdaq recorded 18 new highs and 190 new lows.

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