US markets closed higher on Wednesday after the Federal Reserve kept interest rates unchanged, while investors assessed the outlook for further monetary tightening and awaited quarterly results from major technology companies.
The Dow Jones Industrial Average rose 97 points, closing at 52,475.10.
The S&P 500 gained 0.28% to 7,743.98, while the Nasdaq Composite advanced 0.27% to 26,549.85.
The Federal Open Market Committee maintained its benchmark interest rate at 3.75% to 4%, as expected.
The central bank upgraded its assessment of economic activity but reiterated that inflation remained elevated.
Fed holds rates as investors assess December outlook
The Fed’s decision followed September’s quarter-percentage-point rate increase, its first since 2023.
Investors are now looking towards December for the next potential move, with futures markets indicating a rising probability of another increase.
According to CME’s FedWatch tool, markets priced in an 87.4% likelihood of a 25-basis-point hike in December, up from 78.3% on Tuesday.
Arthur Azizov, CEO and founder of B2BROKER Group, said the decision was reasonable given the limited options available to policymakers amid persistent inflation and a weak labour market.
“I believe this move is reasonable because right now there is very little room to do anything else. Inflation is still high, but it is almost fully driven by the oil shortage, which can’t be changed with interest rates, and the weak labor market does not allow for tighter policy. Also, we’re just a few days away from the midterms, and no central banker wants to make a big move before such an event.”
He said the decision could support equities and provide some support for gold, although he did not rule out a December increase.
Future policy decisions, he added, would depend partly on oil prices and labour market data.
Investors are due to receive further economic information on Thursday, including the September personal consumption expenditures price index, the Fed’s preferred inflation measure, and an advance estimate of third-quarter gross domestic product.
Chip stocks rise as AI earnings take centre stage
Technology stocks linked to artificial intelligence supported the market as investors awaited earnings from Microsoft and Alphabet after the closing bell.
Oracle shares jumped more than 11% after the company outlined its fiscal 2030 revenue target of at least $225 billion and said it would limit additional capital raises to $20 billion between fiscal 2027 and fiscal 2030.
Semiconductor stocks also advanced after South Korean chipmaker SK Hynix reported a more than sevenfold increase in quarterly profit. Micron Technology gained, while the Philadelphia Semiconductor Index recorded its fourth consecutive daily advance.
The gains came after recent concerns about the scale of AI infrastructure investment had weighed on technology shares.
Investors are assessing whether substantial spending on computing capacity will translate into sustainable returns.
Earnings results have so far been broadly positive.
Around 200 S&P 500 companies had reported third-quarter results, with 84% beating consensus estimates, according to LSEG data. Analysts projected aggregate earnings growth of 31.8% year over year.
Oil prices and company earnings drive individual stocks
Oil prices rose after Iran-backed Houthi forces attacked a refinery in Saudi Arabia, adding to concerns about supply disruptions.
Higher energy costs have contributed to inflationary pressure since the Iran war began.
Individual stocks moved on company-specific developments.
Vertiv advanced after beating quarterly expectations and raising its full-year revenue and profit forecasts.
Robinhood fell after weaker cryptocurrency activity contributed to a third-quarter profit miss, while Boston Scientific declined after cutting its annual profit outlook.
The market’s next direction will depend on incoming inflation data, expectations for the Fed’s December decision, and results from major technology companies.
Investors will also continue to assess whether AI-related spending can sustain earnings growth amid elevated costs and financing requirements.
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