U.S. benchmark equity indices experienced a notable surge on Wednesday, following remarks from Federal Reserve Chair Jerome Powell, suggesting that monetary policy easing in September 'could be on the table.' This remark has invigorated investors' confidence, leading to increased trading activity across major sectors.
The Nasdaq Composite soared by an impressive 2.6%, closing at 17,599.4, with technology stocks contributing significantly to this rise. The S&P 500 also saw substantial gains, climbing 1.6% to finish at 5,522.3. In contrast, the Dow Jones Industrial Average exhibited a more modest advance of 0.2%, reaching 40,842.8.
Notably, the technology sector led the charge among gainers, while the healthcare sector faced the steepest decline, underscoring the market's mixed reactions to sector-specific performance. The Federal Open Market Committee (FOMC) made the decision to keep its benchmark lending rate unchanged at a range of 5.25% to 5.50%, marking the eighth consecutive pause.
Despite maintaining this rate, the FOMC acknowledged that inflation remains 'somewhat elevated,' even as it has shown signs of easing over the past year. Powell emphasized that should inflation continue to cool and align with expectations, alongside positive economic indicators, a rate cut may indeed be considered in September.
Such comments are crucial as they set the tone for investor sentiment heading into the latter part of the year. Further impacting the markets, the U.S. 10-year Treasury yield fell 8.1 basis points to settle at 4.06%, while the two-year yield saw a decline of 7.8 basis points to 4.28%. These decreases in yields often indicate investor expectations of economic growth and potential cooling inflation.
In terms of corporate news, Nvidia ($NVDA) stood out as shares surged by nearly 13%, positioning it as the leading gainer on the Nasdaq and one of the best performers on the S&P 500. This uptick came after Nvidia announced on Monday the launch of generative artificial intelligence models and NIM microservices intended to enhance the Universal Scene Description (OpenUSD) framework, aiming to expand its applications in robotics, industrial design, and engineering.
In contrast, Boeing ($BA) experienced a bounce in its stock, rising by 2% despite the company facing challenges. The aircraft manufacturer appointed a new chief executive amidst a larger-than-expected loss reported for the second quarter. On the downside, Humana ($HUM) recorded the most significant decline on the S&P 500, plummeting 11%.
This drop followed a warning from the health insurer regarding inpatient hospital admissions that were higher than anticipated, despite posting second-quarter financial results that surpassed market expectations. Marriott International ($MAR) also faced difficulties as shares fell 4.8%, marking one of the steepest declines on both the S&P 500 and the Nasdaq.
This downturn came after the hotel operator revised its guidance for full-year earnings and global revenue per available room following disappointing second-quarter sales. Meanwhile, West Texas Intermediate crude oil prices surged by 4.9% to $78.37 per barrel. The spike in oil prices was attributed to a report indicating that commercial crude stockpiles in the U.S.
had fallen more than anticipated. Additionally, geopolitical tensions heightened as news broke regarding the death of Hamas leader Ismail Haniyeh in Iran, which Iran accused Israel of orchestrating, prompting strong rhetoric from Iranian leaders regarding potential retaliation. On the economic front, pending home sales in the U.S.
outpaced expectations last month, reflecting robust demand in all four major regions. Increased inventory has provided buyers with greater leverage, according to data released by the National Association of Realtors. In July, employment growth within the U.S. private sector slowed down, as reported by Automatic Data Processing ($ADP), while annual pay gains for job stayers registered the slowest growth in three years.
This comes ahead of the Bureau of Labor Statistics' upcoming report, which is expected to announce that the U.S. economy added 175,000 nonfarm jobs in the current month, a decrease from June's gain of 206,000 jobs. On the commodities front, gold prices rose by 1.8% to $2,494.80 per troy ounce, while silver also saw a gain, climbing 2% to $29.09 per ounce.
These movements in precious metals often reflect investor sentiment amid economic uncertainties..