Stocks – Apple, Chips Lead Nasdaq Higher as Fed Stands Pat
Investing.com – Technology stocks were the stars of the day Wednesday as the Federal Reserve held steady on interest rates and Chairman Jerome Powell pronounced the economy “in a good place.”
The major averages saw small gains overall, but chip and chip-related stocks, including Applied Materials (NASDAQ:), Intel (NASDAQ:), Micron Technology (NASDAQ:) and Lam Research (NASDAQ:), had decent gains as traders appeared to be betting that the Trump Administration will hold off on imposing new tariffs on imports from China.
Apple (NASDAQ:), which manufactures most of its products in China, hit a new all-time high.
The was up 0.29%. The climbed back from an early loss to end 0.11% higher. The added 0.44% while the tech-dominated index added 0.58%.
The market moves came as the Federal Reserve held its key federal funds rate at 1.5% to 1.75% and signaled it probably won’t move rates lower or higher for some time to come, perhaps all of 2020. It would take a sustained period of inflationary pressures to get the Fed to move rates up, Chairman Jay Powell said in his news conference and the economy is able to cope with current rates.
The Fed sees a growing labor market, modestly growing wages, little inflation. The risks to the economy remain trade disputes and weak business investment.
There are, of course, risks from the ongoing U.S.-China trade fight and all the tariffs the Trump Administration has imposed so far and could impose over the weekend if President Donald Trump decides the negotiations are unnecessarily stalled.
Additional risks are slowing economies in Europe and elsewhere. Europe, especially, is wracked by the Brexit battle, which will climax Thursday when voters in the United Kingdom head to the polls for a snap parliamentary election. Prime Minister Boris Johnson’s Conservatives are expected to add seats.
The uncertainties of both may mean stocks tread water the rest of the week.
The Dow was held back in part by a decline in Home Depot (NYSE:), which cut its guidance for fiscal 2020 same-store sales growth modestly. The shares were down 2%, which translated into more than 26 Dow points.
But remember only 14 Dow stocks were higher on the day.
For much of the day, Boeing (NYSE:) was lower, but finished up 0.60%. The decline came as Federal Aviation Administration Chairman Steve Dickson told CNBC the agency won’t recertify the 737 Max plane before the end of the year.
“If you just do the math, it’s going to extend into 2020,” Dickson said.
The rebound may reflect the market’s conviction that the plane will get recertfied. When is the question.
There are at least 10, maybe 11, milestones to complete. And Dickson did not want to seem to accelerate the recertification process. Documents released at a Congressional hearing Wednesday showed FAA staffers worried the 737 Max was potentially a more dangerous plane than anyone thought after its 2018 crash in Indonesia. It took a second crash in Ethiopia to force the FAA to ground the plane.
fell after several days of gains. was higher in New York. The Treasury yield was lower.
It may surprise, but the U.S. stock market has gone nowhere so far in December.
The Dow is down 0.5% for the month. The S&P 500 is basically flat. The Nasdaq is down 0.13%, and the Nasdaq 100 is flat.
But 2019 has been a great rebound from the slump in the fall of 2018. The Dow is up 19.7% for the year. The S&P is up 25.3%. The Nasdaq is up 30.4%, while the Nasdaq is still up 32.7%.
Chip company Skyworks Solutions (NASDAQ:), producer Freeport-McMoran Copper & Gold (NYSE:), chip-equipment company Applied Materials (NASDAQ:) and chip company Micron Technology (NASDAQ:) were among the top-performing S&P 500 companies.
Food company General Mills (NYSE:), fashion retailer L Brands (NYSE:), clothing retailer Gap (NYSE:) and Marathon Petroleum (NYSE:) were the S&P 500 laggards.