Major indexes surged Wednesday after the Federal Reserve left interest rates untouched and indicated there could be three rate cuts in 2024. The Dow Jones Industrial Average jumped after wallowing in break-even territory for much of the day, as did the S&P 500 and Nasdaq.
Fed governors left interest rates at their current 5.25%-5.5% levels. While the Fed agreed that inflation has eased, it remains elevated. The Fed's policy statement indicated another rate hike was possible, but could end up cutting rates by as many as 75 basis points next year.
Fed Chair Jerome Powell is due to speak at 2:30 p.m. ET. According to the CME FedWatch Tool, the odds of a rate cut are 44% for March and 49.2% for May.
In the statement, the Fed stated that "the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities" to return inflation to 2%.
Dow Jones, Other Indexes Surge On News
The Dow Jones index was languishing in flattish territory prior to the announcement but jumped more than 300 points for a gain of 0.9% in afternoon trades. The S&P 500 surged 1% on the stock market today.
Meanwhile, the tech-heavy Nasdaq regained momentum and also climbed 1%. The Nasdaq had touched a new high for the year on Tuesday.
The small-cap Russell 2000 index turned from negative to positive, climbing 1.3% in recent action. And the Innovator IBD 50 ETF jumped more than 1% on the Fed news.
Among sectors, materials lagged while utilities led. Volume on the New York Stock Exchange and the Nasdaq was higher compared with the same time on Tuesday.
The yield on the benchmark 10-year Treasury note fell 14 basis points to 4.07%.
More Inflation Data
Earlier Wednesday, the producer price index came in below views of a 0.1% increase and was unchanged for November, according to Econoday. Annually, producers saw prices increase 0.9% vs. views of a 1% increase.
The signs of cooling inflation got even better for core PPI, which excludes food and energy. That figure remained unchanged, though Wall Street expected a 0.2% increase for the month.
However, inflation data disappointed on Tuesday and showed prices rose 0.1% in November from October. Wall Street had expected them to stay flat.
Dow Jones Companies And Stocks Near A Buy Point
Tech stocks took the early lead. Microsoft, Salesforce and Apple rose. Apple is in buy range from a handle entry of 192.93.
Cisco was flat. United Health turned positive while Verizon underperformed.
Outside the Dow, Adobe fell 1.5% and now sits just below an alternate buy point of 628.60. Adobe is due to report earnings after the market close. On Tuesday, analysts at Citi raised their price target to 675 from 610 while maintaining a neutral rating.
On the IBD 50, Amphastar Pharmaceuticals broke out of a cup with handle and surged to the top of its buy zone. Meta has rebounded from the 50-day moving average just above a buy point of 326.20. Meta is also on IBD Leaderboard.
MongoDB and Dynatrace are on watch, as well. MDB is near a buy point of 412.67. Dynatrace is in a buy zone from a 52.60 entry. Further, Take-Two Interactive gapped up above its buy zone from a 153.84 entry. IBD 50 stock Intra-Cellular Therapies is at a buy point of 63.93.
Also outside the Dow Jones index, Photronics gapped up after earnings. Shares held some of their early gains in afternoon trades. Sales grew 8% in the fourth quarter while earnings of 60 cents per share rose 18% from the prior year quarter.
Dow Hits New High In Fed-Led Rally; Adobe Falls Late
Tesla Falls
Among Magnificent Seven stocks, Tesla fell more than 1.5%. It was revealed that the Inflation Reduction Act tax credit will stop applying to some of Tesla's Model 3 vehicles. The stock is at risk of giving up the 50-day line.
Also, the electric-vehicle giant plans to release a software update for more than 2 million of its vehicles under recall over concerns about their Autopilot system. The update follows a two-year probe by the National Highway Traffic Safety Administration.
Google-parent Alphabet gave up early gains. Shares fell Tuesday after a negative jury verdict in an antitrust trial.
Finally, Vertex Pharmaceuticals surged and broke out of a flat base's buy point of 387.42. Shares are at an all-time high after the drugmaker released positive results from a study for its pain treatment for peripheral neuropathy in diabetic patients.
Please follow VRamakrishnan on X/Twitter for more news on the stock market today.
