Closing Stock Market SummaryThe S&P 500 began the day comfortably higher as Apple's (AAPL 165.25, +10.57, +6.8%) better-than-feared earnings and Boeing's (BA 387.72, +22.81, +6.3%) impressive report fueled broad-based buying interest. The benchmark index then added as much as 1.9% after the Federal Reserve provided some market-friendly commentary before finishing up 1.6%.
The Dow Jones Industrial Average gained 1.8%, the Nasdaq Composite gained 2.2%, and the Russell 2000 gained 1.1%.
All 11 S&P 500 sectors finished higher with information technology (+3.0%) and consumer discretionary (+2.2%) leading the advance.
Specifically, Apple reported in-line Q1 results and guided Q2 revenue that was towards the low end of expectations, yet that was apparently enough to placate investors who found some comfort in the solid growth reported for the company's services business. Boeing for its part exceeded Q4 revenue and earnings estimates by a wide margin and issued upbeat FY19 guidance.
Advanced Micro Devices (AMD 23.09, +3.84) joined Apple with a better-than-feared report, which catapulted the stock 20.0%, and provided strong support for the Philadelphia Semiconductor Index (+2.9%) and the heavily-weighted information technology sector.
Not all stocks, however, were able to brush past underwhelming results.
Asset management stocks T. Rowe Price (TROW 89.24, -3.51, -3.8%), Franklin Resources (BEN 29.09, -2.10, -6.7%), and Invesco (IVZ 18.59, -0.47, -2.5%) weighed on the underperforming financial sector (+0.4%). In addition, McDonald's (MCD 181.77, -0.40, -0.2%), AT&T (T 29.37, -1.33, -4.3%), and Amgen (AMGN 184.86, -7.25, -3.8%) slumped following their reports.
Still, it was a relatively strong morning with the market rallying around a host of earnings reports that were generally not as bad as anticipated.
At the same time, investors were hopeful that U.S.-China trade talks, which began in Washington on Wednesday, and that the FOMC decision, and a follow-up press conference from Fed Chair Powell, would bode well for the market.
True to the bullish narrative, the S&P 500 more than doubled its gains from 0.8% to 1.7% in the time between the FOMC releasing its policy directive at 2:00 p.m. ET and Fed Chair Powell's follow-up press conference at 2:30 p.m. ET to explain the FOMC's thinking.
The FOMC voted unanimously to keep the fed funds rate unchanged at a target range of 2.25% to 2.50%, as expected.
The underlying message from that decision, and Mr. Powell's press conference, is that the market need not fear the Fed (for the time being anyway), as the Fed is content to be patient with its policy approach and is open to curtailing its balance sheet normalization effort if necessary.
The Fed's dovish-minded perspective sent U.S. Treasuries in the belly of the curve to session highs. Longer-dated Treasuries were less affected.
The 2-yr yield, which was up as much as two basis points, decreased four basis points to 2.53%. The 10-yr yield, which was up as much as two basis points, decreased two basis points to 2.70%. The U.S. Dollar Index also fell on the news, losing 0.4% to 95.43.
Reviewing Wednesday's economic data, which included the ADP National Employment Report for January, Pending Home Sales for December, and the weekly MBA Mortgage Applications Index:
- The ADP National Employment Report showed an increase of 213,000 in January (consensus 170,000), and the December reading was revised to 263,000 (from 271,000).
- Pending Home Sales decreased 2.2% in December (Briefing.com consensus +0.7%). Today's reading follows a revised decrease of 0.9% in November (from -0.7%).
- The weekly MBA Mortgage Applications Index decreased 3.0% following a 2.7% decline in the prior week.
Looking ahead, investors will receive the fourth quarter Employment Cost Index, the weekly Initial and Continuing Claims report, and the Chicago PMI for January on Thursday.
- Russell 2000 +10.3% YTD
- Nasdaq Composite +8.3% YTD
- Dow Jones Industrial Average +7.2% YTD
- S&P 500 +7.0% YTD