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Stocks Rise After Fed Leaves Interest Rates Unchanged, Signals Possible Cuts



  • The Adobe Dow Jones Industrial Average (NYSE: ADBE – Get Report) has climbed after the San Jose, Calif.-based software company beat Wall Street's second-quarter earnings estimates. Adobe is Real Money's Stock of the Day.
  • U.S. Steel (X – Get Report) shares advanced after the steelmaker said it plans to idle two furnaces in the US

Wall Street Overview

Stocks ended higher for the third straight day Wednesday after the Federal Reserve said it would hold interest rates steady, while signaling that rates cuts might be needed soon

The announcement came at the end of the two-day Federal Open Market Committee meeting. The Fed's key rate will remain at a range of 2.25% to 2.5%, according to a statement from the Fed's monetary-policy committee led by Jerome Powell's chair. But the committee warned of "downside" risks to the current decade-old economic expansion, one of the longest in the U.S.

"We are ready to move and use our tools as needed to sustain expansion," said Jerome Powell, a Fed Chairman, during a televised press conference after the decision was announced. Dow Jones Industrial Average climbed 38 points, or 0.1

5%, to 26,504, the S & P 500 rose 0.30%, while Nasdaq advanced 0.42%.

"We're definitely hearing a decidedly more Fed and while you could point your finger at the White House, it's key to remember that Fed's focus has always been on two things and two things only: Jobs and inflation , "said Mike Loewengart, vice president of investment strategy at E * Trade. "Jobs [are] strong so no worries on that front, but inflation has been consistently below the Fed's target, which would suggest they need to act to get it back to where it needs to be. "

Jason Pride, chief investment officer of private wealth at Glenmede, said the Fed left rates unchanged, but" laid the foundation for a potential rate cut within the next three months. "

" The language within the Fed's statement appears to be setting the stage for a potential rate cut with the removal of the patient in reference to the future path of monetary policy, "Pride said. "Such a move by the Federal Reserve could be characterized as a 'insurance' rate cut, a rate cut that is not justified by "

The main risk to economic outlook, Pride said," remains US-China trade relations – either tensions continue to rise and more "

" There was no major change in economic outlook, as inflation has been muted and actually declined from previous reports, "said Brian Pirri, principal at New England Investment & Retirement Group. "The equity and fixed income markets have taken this news positively as the Fed set the stage for possible easing later this year, either in July or September."

President Donald Trump, a constant critic of the Fed, has been pushing for a rate cut. He suggested on Tuesday that Powell's future as head of the central bank may hinge on his consent to lower interest rates.

"The law is clear that I have a four-year term and I fully intend to serve it," said Powell.

Trump has sought to " the level of playing field "in global commerce with lower interest rates, and European Central Bank President Mario Draghi promised to re-start the € 2.6 trillion bond purchase program if growth and inflation continue to slow.

Trump, meanwhile, said he would be meeting with Chinese President Xi Jinping later this month at the G-20 Summit in Osaka, Japan. The world's two largest economies have been locked in a trade war and Trump has threatened to impose tariffs on $ 300 billion more in Chinese imports

.

The Brent Crude Contracts for August delivery, the global benchmark, were 17 cents higher than their Tuesday close in New York and changing hands at $ 62.31 per barrel, while West Texas Intermediate Contracts for July, which are more tightly linked to US gas prices, were 45 cents higher at $ 54.56 per barrel

Shares of Adobe (ADBE – Get Report) climbed 5.2% to $ 291.21 after San Jose-based software company beat Wall Street's second-quarter earnings estimates. Adobe is Real Money's Stock of the Day.

U.S. Steel (X – Get Report) shares advanced 4.1% to $ 15.17 after the steelmaker said it plans to idle two furnaces in the US

The shares of Southwest Airlines (LUV – Get Report) slipped slightly to $ 51.51 after the carrier boosted the lower end of its second-quarter profit forecast but noted that all 34 of its Boeing 737 Jim Cramer: The One Stock to Sell Ahead of a Fed Decision


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