Wall Street ends higher as Fed holds key rate steady, focus turns to earnings

NEW YORK: US stock indexes advanced on Wednesday after the US Federal Reserve left its key policy rate unchanged, as widely expected, leaving investors betting on a rate hike at its next monetary policy meeting in December.

In its accompanying statement, the Fed upgraded its assessment of the economy while acknowledging inflation "remains elevated".

At the press conference following the release, Fed Chair Kevin Warsh said the central bank had made clear its willingness and readiness to act.

"The Fed didn't throw any curveballs," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "It was widely expected they'd hold, so no big surprise there."

All three major US stock indexes oscillated following the decision and throughout Warsh's subsequent press conference, but ended the session higher.

"Market participants are getting more used to (Warsh's) style," Detrick added.

Financial markets are pricing in an 85.00 per cent likelihood of a 25-basis-point rate hike at the Fed's December meeting, up from 78.30 per cent on Tuesday, according to CME's FedWatch tool.

Rate hike forecasts could be swayed by data expected on Thursday, including the Commerce Department's Personal Consumption Expenditures report — which includes the central bank's preferred inflation gauge — and an advance take on third-quarter gross domestic product (GDP).

Third-quarter earnings season is in full swing, with 200 companies in the S&P 500 having posted results. Of those, 84 per cent have beaten consensus estimates, according to the most recent LSEG data.

Analysts estimate aggregate third-quarter S&P 500 earnings growth of 31.80 per cent year-on-year, up from 30.60 per cent as of Oct 1, per LSEG.

Memory chipmaker Micron Technology jumped 5.90 per cent after South Korean rival SK Hynix reported a more than sevenfold jump in quarterly profit. SK Hynix's US-listed shares jumped 13.30 per cent.

The Philadelphia SE Semiconductor index gained 1.80 per cent, notching its fourth consecutive daily advance and bouncing back from its recent sell-off.

"I think the market realises what the Fed did today is one thing, but are AI expenditures continuing?" Detrick said. "That's what the market's focused on."

Microsoft gained over four per cent in extended trading after posting quarterly results, while Alphabet shares dropped more than seven per cent in after-hours trading following the Google parent's earnings report.

The Dow Jones Industrial Average rose 97.53 points, or 0.19 per cent, to 52,475.10, the S&P 500 gained 21.37 points, or 0.28 per cent, to 7,743.97 and the Nasdaq Composite gained 72.04 points, or 0.27 per cent, to 26,549.85.

US crude prices climbed after Iran-backed Houthis attacked a refinery in Saudi Arabia, adding to supply worries.

Since the Iran war began, oil prices have soared to over US$100 per barrel, pushing up costs in other areas of the economy and driving inflation higher.

Robinhood dipped 3.30 per cent after softness in cryptocurrencies dragged the trading platform's third-quarter profit below analyst expectations.

Vertiv surged 16.50 per cent after the digital infrastructure firm topped quarterly expectations and raised its full-year profit and revenue forecasts.

Boston Scientific dropped 5.80 per cent after the medical device maker trimmed its annual profit forecast.

Advancing issues outnumbered decliners by a 1.05-to-1 ratio on the NYSE. There were 110 new highs and 214 new lows on the NYSE.

On the Nasdaq, 2,849 stocks rose and 1,926 fell as advancing issues outnumbered decliners by a 1.48-to-1 ratio.

The S&P 500 posted 19 new 52-week highs and 14 new lows while the Nasdaq Composite recorded 75 new highs and 198 new lows.

Volume on US exchanges was 16.67 billion shares, compared with the 17.10 billion average for the full session over the last 20 trading days.