Highlights
Stocks perked up Wednesday with gains in the afternoon as the market liked the Federal Reserve's decision to slow down its balance sheet reduction, which pushed down Treasury yields. The Dow Jones industrial average rose 0.9 percent, the S&P 500 rose 1.1 percent, and the Nasdaq was up 1.4 percent. US bond yields fell while the dollar and oil prices rose.
The Fed news on slowing the pace of quantitative tightening allowed investors to pay less attention to somewhat hawkish messaging from the FOMC. That included Fed Chair Jerome Powell saying economic conditions remain strong and his comment that the Fed is in no rush to adjust policy until the impact of tariffs and other policy changes become clearer. It also included news that fewer members of the FOMC are projecting multiple rate cuts while inflation forecasts for this year were revised up. Separately, Powell suggested the Fed's base case is that tariff effects on inflation are likely to prove transitory, an eerie echo from the pandemic years.
A bounce in megacaps helped the major averages end strong on dip-buying after leading the way down on Tuesday. Reflecting the strength in megacaps, best sectors included technology, consumer discretionary and communication services plus energy, industrials, materials and financials. Lagging were consumer stapkles and health care.
The Fed news on slowing the pace of quantitative tightening allowed investors to pay less attention to somewhat hawkish messaging from the FOMC. That included Fed Chair Jerome Powell saying economic conditions remain strong and his comment that the Fed is in no rush to adjust policy until the impact of tariffs and other policy changes become clearer. It also included news that fewer members of the FOMC are projecting multiple rate cuts while inflation forecasts for this year were revised up. Separately, Powell suggested the Fed's base case is that tariff effects on inflation are likely to prove transitory, an eerie echo from the pandemic years.
A bounce in megacaps helped the major averages end strong on dip-buying after leading the way down on Tuesday. Reflecting the strength in megacaps, best sectors included technology, consumer discretionary and communication services plus energy, industrials, materials and financials. Lagging were consumer stapkles and health care.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
