NEW YORK (Reuters) – The dollar slid and equities surged on Wednesday, fuelled at first by Boeing and Apple’s results and later by the Federal Reserve pledging to be patient with future interest rate hikes, a change in tone stock investors interpreted as a buy signal. FILE PHOTO: Traders work on the floor of the
NEW YORK (Reuters) – The dollar slid and equities surged on Wednesday, fuelled at first by Boeing and Apple’s results and later by the Federal Reserve pledging to be patient with future interest rate hikes, a change in tone stock investors interpreted as a buy signal.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 29, 2019. REUTERS/Brendan McDermid
The Fed held interest rates steady at the end of a two-day meeting in which it struck language in a December policy statement that projected “some further” rate hikes would be appropriate in 2019.
U.S. stocks extended their gains and bond yields fell as markets got what they were hoping for, said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.
“This marks a full 180 from what the Fed was signalling just a few months ago,” El-Erian said.
Scott Minerd, global chief investment officer at Guggenheim Partners in Santa Monica, California, said the Fed’s pause will further extend the economic expansion, allowing excesses to continue to build and increasing risks of financial instability.
“The Fed refilled the punch bowl and the party goes on. Buy risk assets,” Minerd said.
The MSCI world equity index, which tracks share performance in 47 countries, rose 1.39 percent following gains in Asia overnight. The FTSEurofirst 300 index of leading shares in Europe closed up 0.41 percent.
The Dow Jones Industrial Average rose 524.73 points, or 2.13 percent, to 25,104.69. The S&P 500 gained 50.13 points, or 1.90 percent, to 2,690.13, and the Nasdaq Composite added 172.63 points, or 2.46 percent, to 7,200.92.
Upbeat results from Boeing and Apple late on Tuesday provided investors early relief as they awaited the Fed statement and as U.S.-China trade talks started in Washington.
Boeing shares jumped after the world’s largest planemaker raised its profit and cash flow expectations for 2019 amid a boom in air travel. Boeing also indicated it had overcome supplier delays that snarled 737 production last year.
Apple results provided some reassurance as the iPhone maker reported sharp growth in its services business.
Boeing shares rose 6.63 percent and Apple gained 7.31 percent.
Oil prices rose, paring gains of more than 1 percent, as the potential for supply disruptions following U.S. sanctions on Venezuela’s oil industry lifted prices.
Stocks listed in London jumped more than 1 percent after British lawmakers late on Tuesday rejected a proposal in Parliament that aimed to prevent a potentially chaotic “no-deal” Brexit, a vote that initially pushed sterling sharply lower.
The exporter-heavy FTSE 100 in London rose 1.45 percent as its components often are boosted by a weaker pound because its multinational companies earn a large portion of their revenue abroad in foreign currency.
Sterling rose 0.04 percent to $1.3071 after sliding about 0.7 percent against the dollar and the euro following parliamentary votes on Brexit.
“The vote is not fundamentally changing the way the market’s talking about Brexit,” said Hetal Mehta, Legal & General Investment Management senior European economist.
Payrolls processor ADP reported that the U.S. private sector added 213,000 jobs in January, which beat forecasts for gains of 178,000. But the monthly total was lower than the 271,000 jobs added in December.
The dollar index fell 0.50 percent to 95.343. Against the yen, the dollar fell 0.44 percent to 108.90.
The euro gained 0.53 percent to $1.1491.
Benchmark 10-year U.S. Treasury notes rose 4/32 in price to push yields down to 2.6954 percent.
U.S. West Texas Intermediate crude futures gained 92 cents to settle at $54.23, while international Brent crude futures rose 33 cents to settle at $61.65 per barrel.
Graphic: World FX rates tmsnrt.rs/2egbfVh
Reporting by Herbert Lash, additional reporting by Jennifer Ablan; Editing by Alistair Bell and Will Dunham