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U.S. stocks surged higher into the close of trading Wednesday, taking the Dow to a fresh record high, as investors dug into the Federal Reserve's final policy meeting of the year, which held rates steady at a 22-year high, as well as indications that it could begin easing policy in 2024.
The Dow added more than 500 points on the session, nearly all of it during the final hours of trading that followed the Fed's surprise interest rate statement, which included new economic projections that call for around 75 basis points in rate cuts next year with a nod to slowing growth and easing inflation pressures.
"The Fed had a difficult task in setting the tone for 2024 and aligning the market narrative with the Fed’s views," said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management in Minneapolis.
"While most of the work was done through an update to the economic projections, including the dot plot, Chairman Powell has certainly set a dovish tone at this meeting," he added. "The reality is the Fed’s prescription to cool inflation has been working and the Fed now views the current Fed funds rate will be too restrictive for the economy in 2024."
The S&P 500 ended the day 62.6 points higher, or 1.34%, while the Nasdaq gained 186 points, or 1.28%. The Dow, meanwhile, marked its first record high close since January of 2022, rising 512 points to 37,0.90.24 points.
Updated at 3:07 PM EST
Hang on Sloopy
Fed Chairman Jerome Powell told reporters during his press briefing in Washington that he and his colleagues were "aware of the risk that we could hold on for too long" in terms of higher interest rates, adding the Fed is "very focused on not making that mistake".
He also noted that this morning's factory gate inflation data, which showed a big easing in producer price pressures, were reflected in the Fed's new dot plot forecasts.
Updated at 2:42 PM EST
None and done
U.S. stocks are extending earlier gains following the dovish Fed decision with the S&P 500 marked 42 points higher, or 0.92%, on the session while the Dow Jones gained 315 points. The tech-focused Nasdaq was marked 137 points, or 0.95%, higher.
Benchmark 10-year Treasury note yields fell 8 basis points to 4.067% following the interest rate decision while 2-year notes eased 15 basis points to 4.516%.
Related: Fed meets markets with first hints of 2024 interest rate cuts as inflation slows
Updated at 2:05 PM EST
First easing signals
The Fed, as expected, held rates steady at between 5.25% and 5.5% at its final meeting of the year, but fresh economic projections suggest the chances of around three quarter point rate cuts in 2024.
"Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter," the Fed said. "Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated."
Stocks jumped higher in the wake of the Fed decision, with the Dow rising 170 points and the S&P 500 rising 27 points, or 0.58%, on the session. Benchmark 10-year note yields fell 7 basis points to 4.081%.
Updated at 1:03 PM EST
Waiting game
Investors aren't prepared to take any risk ahead of today's Fed decision, which is up in less than an hour, as markets look to have their 2024 rate cut forecasts challenged or confirmed by Chairman Powell's comments.
The S&P 500 was last marked 4 points, or 0.08% higher on the day while the Dow gained 7 points and the Nasdaq added 4 points.
Updated at 11:04 AM EST
Apple for the teacher
Apple (AAPL) -) shares, which languished for much of the summer before slumping to five-month low in late October, are now within $2 of their all-time high Wednesday and changing hands at $196.44 each.
The gains are helping the Nasdaq to a 0.3% advance on the session, with the S&P 500 marked 0.22% higher and the Dow largely unchanged from last night's close.
Updated at 9:33 AM EST
Proceeding with caution
Stocks are holding the line at the opening bell, with the S&P 500 just 1 point into the green and the Dow marked 21 points lower. The Nasdaq, meanwhile, added 42 points amid the pullback in Treasury yields, but all focus now will center on the Fed decision later this afternoon and Chairman Jerome Powell's press conference at 2:30 eastern time.
Updated at 8:39 AM EST
Factory inflation follow-on
Producer prices rose 0.9% from last year in November, the lightest increase since June and a tenth of a percent inside Street forecasts, while core pressures were unchanged from October, adding to evidence that inflation is falling in virtually all corners of the world's biggest economy.
Treasury yields moved lower in the wake of the data release, with benchmark 10-year notes falling 2 basis points to 4.17% and 2-year paper pegged at 4.691%.
Stocks were also extending gains, with the S&P 500 called 7 points higher and the Dow looking at a 45 point opening bell advance. The Nasdaq is called 52 points higher.
Updated at 7:33 AM EST
Pfizer fizzles
Pfizer (PFE) -) shares are falling sharply in pre-market trading, extending their 2023 collapse to around 50%, following a disappointing 2024 profit update marred by slumping vaccine sales and a 40 cent hit from its $43 billion Seagen purchase.
Related: Pfizer tumbles on 2024 revenue forecast amid covid vaccine sales slump
Stock Market Today
The Fed is widely expected to keep its benchmark lending rate at a two-decade high of between 5.25% and 5.5% when it wraps up its two-day policy meeting later today in Washington.
The central bank's rate-setting committee, chaired by Jerome Powell, is likely to focus on stubbornly high core-inflation rates and a resilient job market, when it releases its rate decision and statement at 2 p.m. U.S. Eastern Time. The report will also include fresh growth and inflation forecasts for the world's biggest economy.
The new Summary of Economic Projections, colloquially known as the dot plots, could prove crucial in mapping out the Fed's near-term forecasting following September's release, which called for no rate cuts in 2024 and the current market forecast of at least four.
Related: Fed Chair Powell can lean into rate cut bets after sticky November inflation report
Bond markets were steady heading into today's decision, following a trio of solid, but by no means spectacular, Treasury auctions earlier this week. Those included a $37 billion 10-year sale on Monday and a $21 billion sale of 30-year bonds yesterday.
Benchmark 10-year paper was holding near a three-month low of 4.183% in early New York dealing while 2-year notes were last pegged at 4.726%, The 2-year has added some 20 basis points (0.2 percentage point) so far this month following hotter-than-expected November job and inflation reports.
The U.S. dollar index, meanwhile, was marked 0.06% higher at 1043.926, taking its December gain to around 0.5%.
In other markets, oil prices slid to an early June low in overnight trading, before finding support ahead of today's Energy Department data release on domestic crude stockpiles. The report comes amid broadening concern about demand in a slowing global economy.
Brent crude futures contracts for February delivery, the global pricing benchmark, were last seen trading 21 cents higher on the session at $73.45 per barrel. WTI contracts for January were marked 24 cents higher at $68.785 per barrel.
On Wall Street, futures tied to the S&P 500, which closed a at January 2022 high of 4,643.70 points to take its 2023 gain to around 20.4%, suggest a 3 point opening bell gain.
Futures tied to the Dow Jones Industrial Average are indicating a 41 point advance. The tech-focused Nasdaq, which is up 38.9% for the year, is called 33 points higher.
In overseas markets, Europe's Stoxx 600 was marked 0.24% higher in early Frankfurt trading, while Britain's FTSE 100 added 0.27% ahead of interest rate decisions from both the European Central Bank and the Bank of England tomorrow.
Overnight in Asia, a muted statement from the Central Economic Work Conference, a key policy event held by policymakers in Beijing, triggered another round of selling in China stocks. The move pushed the regionwide MSCI ex-Japan benchmark 0.44% lower into the close of trading.
The Nikkei 225, meanwhile, closed 0.25% higher in Tokyo, powered by tech and financial stocks, to take its third-quarter advance to around 3.1%.
