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Fed stays put as expected
U.S. stocks closed mixed, with the Dow Jones Industrial Average (DJIA) once surging over 500 points.
The Federal Reserve maintained interest rates unchanged, and Powell said the probability of rate hikes is low.
March JOLTS data shows signs of labor market softening.
Qualcomm's earnings exceeded expectations, and the online used car platform Carvana surged 35% after hours.
As expected, the Federal Reserve announced that it would keep interest rates unchanged. U.S. stocks closed mixed on Wednesday (1st), with the DJIA once surging over 500 points as the market weighed Federal Reserve Chairman Powell's remarks.
By the close of the day, U.S. stocks were mixed. The DJIA rose by 87.37 points, or 0.23%, to close at 37,903.29 points; the Nasdaq Composite fell by 52.34 points, or 0.33%, to close at 15,605.48 points; the S&P 500 index fell by 17.30 points, or 0.34%, to close at 5,018.39 points.
In terms of sectors, the regional banking sector rose, with the SPDR S&P Regional Banking ETF (KRE) closing up 2.57%, ending a four-day losing streak. Among them, New York Community Bancorp closed up 28.30%, Axos Financial Inc closed up 9.66%, and Capitol Federal Financial Inc closed up 6.92%.
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The Federal Reserve maintained interest rates unchanged, and Powell said the probability of rate hikes is low.
The Federal Reserve announced that it would keep the target range for the federal funds rate between 5.25% and 5.5%, in line with market expectations. This is the sixth consecutive time the Federal Reserve has kept interest rates unchanged since July 2023. The Federal Reserve stated that there has been "no further progress" in reducing the inflation rate to the 2% target. It is not appropriate to lower interest rates before inflation sustainability moves towards the 2% target. In addition, the statement modified its description of progress towards achieving its dual mandate of price stability and full employment, with the new wording being slightly reserved, stating that the risks to achieving this goal have "evolved towards a better balance over the past year." There were few other changes in the statement. The Federal Reserve said it would slow the pace of balance sheet reduction starting in June, reducing the pace of U.S. Treasury holdings from $6 billion per month to $2.5 billion per month, while keeping the pace of mortgage-backed security holdings at $3.5 billion per month unchanged.
The next move may not involve rate hikes, briefly boosting U.S. stocks. The DJIA once jumped over 500 points, with the Nasdaq and S&P 500 indices rising in tandem during the session. The 10-year U.S. Treasury yield broke below the 4.6% mark, falling nearly 10 basis points to 4.591%, while the 2-year U.S. Treasury yield fell 10 basis points year-on-year to 4.939%. Jeffrey Gundlach, CEO of DoubleLine Capital, said there would be at most one rate cut this year. He believes that the most important moment on Wednesday was when Powell almost ruled out the possibility of rate hikes.Regardless of the outcome of this year's U.S. presidential election, the Federal Reserve will continue to make interest rate decisions independently; otherwise, there may be negative consequences. He emphasized that the move to slow down the reduction of the balance sheet is not intended to provide an accommodative environment for the economy or to reduce restrictions. The true purpose is to ensure that the process of reducing the balance sheet to the desired level is smooth. In addition, in response to market concerns about "stagflation" in the U.S. economy, Powell expressed a lack of understanding of such worries.
Among the economic data released last week, the U.S. core personal consumption expenditure (PCE) in March grew by 2.8% year-on-year, exceeding the expected level. At the same time, the U.S. real gross domestic product (GDP) for the first quarter grew at an annual rate of 1.6%, which was below the expected level.
March JOLTS data shows signs of labor market softening
In terms of economic data, according to data released by the U.S. Department of Labor, the number of job vacancies in the U.S. in March fell to 8.49 million, the lowest level in three years. At the same time, the quit rate in March fell to 2.1%, and the hiring rate fell to 3.5%, reflecting a softening in the labor market.
According to data released by the Institute for Supply Management (ISM), the U.S. ISM manufacturing index in April fell from 50.3 in March to 49.2, which was below market expectations and dropped below the 50 boom-or-bust threshold.
Qualcomm's performance exceeds expectations, and the online used car platform Carvana surges by 35% after hours
On the corporate side, according to the financial report released by Qualcomm, the company earned $2.44 per share in the second fiscal quarter, with a market expectation of $2.32; it achieved revenue of $9.39 billion, with a market expectation of $9.34 billion. Qualcomm's net income in the second fiscal quarter was $2.33 billion, compared to $1.7 billion in the same period last year. Qualcomm stated that it expects sales in this quarter to be between $8.8 billion and $9.6 billion, higher than Wall Street's expected $9.05 billion; it expects earnings per share to be between $2.15 and $2.35, with a market expectation of $2.17.
Qualcomm's most important mobile business sales grew by 1% year-on-year to $6.18 billion, reflecting the recovery of the smartphone market from the post-pandemic slump. Qualcomm's stock closed down by 1.05% and rose by more than 4% after hours.
Driven by favorable financial reports, the stock price of the online used car retailer Carvana surged by nearly 35% after hours on Wednesday. The company earned 23 cents per share in the first fiscal quarter, achieving revenue of $3.06 billion, which exceeded expectations. Carvana's net profit in the first fiscal quarter reached a record $49 million, compared to a loss of $286 million in the same period last year.
Affected by the bearish financial report, the stock price of Advanced Micro Devices (AMD) closed down by 14.03%. The company's adjusted earnings per share in the third fiscal quarter were $6.65, with an expected value of $5.78; it achieved revenue of $3.85 billion, with an expected value of $3.95 billion. The company raised its revenue forecast for the fiscal year 2024 to between $14.7 billion and $15.1 billion.Crude Oil Inventory Unexpectedly Rises, Oil Price Drops by Over 3%
In the commodity market, according to data released by the U.S. Energy Information Administration, U.S. crude oil inventories unexpectedly increased by 7.3 million barrels last week, while the market expected a decrease of 250,000 barrels. Affected by the data, the price of WTI crude oil futures for delivery in June fell by 3.6%, closing at $79 per barrel, hitting a new low in 7 weeks. The price of Brent crude oil futures for delivery in July fell by 3.4%, closing at $83.44 per barrel.
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