By Chibuike Ojoh
NEW YORK (Reuters) – The Nasdaq Composite and Nasdaq Composite posted their biggest daily percentage gains since Feb. 22 and the Dow Jones Industrial Average rose on Wednesday as chip stocks surged and the Federal Reserve left interest rates unchanged while signaling possible easing in September if inflation slows.
Seven of the 11 sectors in the S&P 500 advanced, led by technology stocks and consumer discretionary. Health care, real estate and consumer staples were the weakest.
The Federal Reserve left its benchmark overnight interest rate at a range of 5.25%-5.50% at the end of its two-day policy-making meeting on Wednesday, but opened the door to easing in September, seven weeks before the November U.S. election. The yield on the benchmark 10-year Treasury note fell 9.8 basis points to 4.043%.
The S&P 500 rose 0.24% to 40,842.79, the FTSE 100 rose 1.58% to 5,522.30 and the Dow Jones Industrial Average rose 2.64% to 17,599.40.
“The Fed not cutting rates in July was the worst-kept secret,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Okla. “The Fed will have its day in September by cutting rates by 25 or 50 basis points, but I wouldn’t be surprised if that was actually priced into stock prices.”
Federal Reserve Chairman Jerome Powell said during his press conference that policymakers discussed the issue of cutting interest rates, but a “strong majority” agreed that now is not the time.
“The statement didn’t move a finger at all,” said Mark Malik, chief investment officer at Siebert Next in New York, referring to the official Fed statement. “But when you listen to him speak, it’s clear that they’re all set to cut rates in September and that they’re going to keep their option.”
Data released early Wednesday morning showed that U.S. private sector payrolls increased much less than expected in July, suggesting an easing of persistent labor market tightness.
During the month, the S&P 500 rose 1.1%, the Dow jumped 4.4%, while the Nasdaq lost 0.8%.
Nvidia (NASDAQ:NVIDIA) shares rose about 13%, helped by a rosy 2024 sales forecast for its AI chips from Advanced Micro Devices (NASDAQ:AUD), whose shares also rose 4.3%. The stock ended up about 7%.
The Biden administration plans to unveil a new rule next month that would expand U.S. powers to block exports of semiconductor manufacturing equipment from some foreign countries to Chinese chipmakers, two people familiar with the matter told Reuters.
Microsoft (NASDAQ: ) shares fell 1% after it reported a huge AI-related spending package. Meta (NASDAQ: ) shares jumped 5% in after-hours trading after its earnings beat market expectations. Apple (NASDAQ: ) and Amazon.com (NASDAQ: ), which report earnings on Thursday, closed up 1.5% and 2.9%, respectively.
Advancing stocks outnumbered declining stocks by a ratio of 2.23 to 1 on the New York Stock Exchange. On the Nasdaq, 2,603 advanced stocks and 1,648 declined, with advancing stocks outnumbering declining stocks by a ratio of 1.58 to 1.
The S&P 500 recorded 68 new 52-week highs and 104 new lows, while the Nasdaq Composite recorded 168 new highs and 104 new lows.
Total trading volume on U.S. exchanges was 13.3 billion, compared to the 20-day moving average of 13.27 billion.