Dollar, Stocks Little Changed on Mixed Fed Signal: Markets Wrap

  • Officials give little indication on timing of next rate move
  • Treasury yield curve steepens as 2-year note pares losses

BofAML's Preusser: See Only One Fed Hike This Year

The latest Federal Reserve policy statement did little to alter market views on the timing for further interest-rate hikes, leaving assets from the dollar to Treasuries and stocks little changed on the day.

The S&P 500 Index eked out a gain to halt a four-day slide, while a Apple Inc.’s best day since July boosted technology-heavy indexes. The Bloomberg Dollar Spot Index pared its advance after Fed officials gave little direction on when it might next raise rates. The yield on 10-year Treasury notes held just under 2.50 percent. The British pound added to gains after the House of Commons voted to allow the prime minister to start divorce talks with the European Union.

The Fed acknowledged rising confidence among consumers and business and reiterated their intention to lift rates gradually as the labor market tightens. The central bank left its options open before Friday’s jobs report delivers the latest reading on labor-market strength and as they grapple with the uncertainty created by a new presidential administration. Members differ over assumptions regarding the extent to which policies proposed by President Donald Trump might boost inflation. 

U.K. Prime Minister Theresa May faces a battle with pro-European lawmakers in her Conservative Party after they grudgingly backed her plan to trigger Brexit negotiations by the end of March in its first test in Parliament.

Read our Markets Live blog here.

Here are Wednesday’s major market moves:

Stocks

  • The S&P 500 rose less than one point to close at 2,279.42. That was good enough to halt a four-day slide that was the longest since the November election.
  • The Dow Jones Industrial Average advanced 24.86 points to end a three-day slump. The index is down 1.1 percent from a record set Jan. 26.
  • Apple Inc. surged 6.1 percent after earnings topped estimates. It was the biggest rally since July and left the stock at its highest level since July 2015.
  • The Stoxx Europe 600 Index climbed 0.9 percent to stop a losing streak.

Currencies

  • The Bloomberg Dollar Spot Index strengthened 0.1 percent, paring a gain that reached 0.4 percent after data from the ADP Research Institute showed private payrolls climbed by 246,000, compared with the 168,000 median projection of analysts surveyed by Bloomberg. 
  • The euro fell 0.2 percent to $1.0778, while the yen traded for 113.06 per dollar.

Bonds

  • The yield on the 10-year U.S. Treasury note added four basis points to 2.49 percent. It fell four basis points on Tuesday.
  • The U.S. yield curve steepened Wednesday in the minutes after the Federal Reserve left its benchmark lending rate unchanged. 
  • The difference between two-year yields and those on 30-year bonds widened to about 186 basis points, from about 182 basis points before the announcement, as shorter-maturity Treasuries pared losses.
  • Verizon Communications Inc. swapped less than a third of the $29 billion it originally sought to exchange in a transaction designed to refinance bonds maturing in the next five years.

— With assistance by Claire Boston, Christopher Condon, and Brian Chappatta

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE