The main indexes of the New York Stock Exchange ended the session with increases on the background of the US Federal Reserve's decision to keep the key interest rates unchanged, reducing its expectations for the number of interest rate increases this year to zero.
The blue-chip index Dow Jones Industrial Average added 216.84 points, or 0.84%, to 25,962.51 points. The broader benchmark S&P 500 rose by 1.09% to 2,854.88 points, while the technology Nasdaq Composite increased by 109.99 points, or 1.42%, to 7,838.96 points.
The indexes have increased to the point that suggests panic-like, sell-on-rallies behavior by investors. The NYSE's Arms index rose to 2.243, which would typically indicate panic-like selling behavior. The increases in the ratio of volume in advancing stocks over declining volume outpace increases in the ratio of the number of advancing stock to declining stocks, as buyers become more aggressive than sellers. The last time the NYSE's Arms was that high was when it reached 2.73 on December 4, when the Dow plunged 799 points.
On Wednesday night, the Federal Reserve officials have lowered their expectations of the US interest rate hikes this year to zero, saying they would end their bond portfolio shrinking in September after leaving monetary policy unchanged. By the 10-0 vote, the Commission maintained the target range of the basic interest rate unchanged from 2.25% to 2.5%.
At the same time, the number of unemployment claims has fallen more than expected, reaching a four-week low, while the labor market is tightening even further after the US government's five-week temporary cessation of work. The unemployment claims dropped to 221,000 in the week ending March 16, outpacing economists' predictions at a level of 225,000, according to data from the Ministry of Finance.
The four-week average, considered to be a better indicator for the labor market as it lowered the volatility from week to week, reached 225,000, rising steadily since October.
On this background, yields on 10-year US Treasury bonds rose to 2.539%, while 30-year bonds fell to 2.965%.
Corporate stocks performance
The companies in the technology sector were particularly strong. Apple climbed 3.7% after analysts at Needham & Co. upgraded the technology giant's stock to a strong "Buy", saying the company's new services initiatives could attract new users. The company has made several product announcements this week and has an event scheduled next Monday where presumably more announcements will be made.
The stocks of the microprocessor manufacturer Micron rose by 9.6% after the company announced its corporate earnings, which surpassed analysts' expectations. This led to an increase in the value of the shares and other companies in the sector, such as those of VanEck Vectors Semiconductor, which ended the session with a growth of 3.5%.
The upbeat forecast helped lift some of its peers. Nvidia rose 5.5% and Advanced Micro Devices climbed 8.5%.
Olive Garden owner Darden Restaurants gained 6.9% after it reported earnings that were far better than analysts were expecting. Darden also raised its own profit forecast for the year.
Conagra Brands vaulted 12.8% after the packaged food company beat third-quarter profit forecasts on higher prices for some of its products.
Financial stocks finished broadly lower for the second straight day, hurt by the prospects for lower interest rates. Fifth Third Bankcorp led the slide, dropping 3.7%.
Corporate earnings reports
The American sportswear manufacturing company NIKE Inc reported financial results for its fiscal 2019 third quarter ended February 28, 2019. The revenue growth was driven by broad-based strength across all geographies as well as NIKE Direct, led by digital. Diluted earnings per share for the quarter was 0.68 USD driven by strong revenue growth and gross margin expansion, partially offset by higher selling and administrative expenses. In the prior year period, diluted loss per share reflected the enactment of the US Tax Cuts and Jobs Act which has impacted comparability with the current period. Net income came to 1.1 billion USD versus a year-ago loss of 921 million USD, not comparable due to effects from tax reform. Its core Nike brand saw growth across wholesale and Nike Direct (led there by digital), categories including Sportswear and Jordan and "continued double-digit growth across footwear and apparel".
The net profit of Tencent Holdings in Q4 2018 fell by 32%, the largest decline since Tencent was listed in 2004, to 14.2 billion CNY (2.11 billion USD), although this was in part due to one-off losses from some subsidiaries. The revenue from its games division grew by 12%, exactly half the growth achieved in the same period a year earlier. Lau told shareholders that new games would be released at a slower rate in the year ahead as the Chinese regulator has a backlog of applications from companies seeking to launch games onto the market. To mitigate slowing game sales in its home market, Tencent will focus on opportunities in other countries.
Posted from my blog with SteemPress : http://financeandmarkets.com/feds-economic-forecast-has-boosted-the-us-indexes/