Wall Street ends higher as Fed holds rate steady

MARKETS

NEW YORK - Stock indexes advanced Wednesday after the Federal Reserve left its key policy rate unchanged, as widely expected, shifting the probability of a rate hike to 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 news conference following the release, Fed Chair Kevin Warsh said the central bank has 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."

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

Financial markets are pricing in an 87.4% likelihood of a 25-basis-point rate hike at the Fed's December meeting, up from 78.3% on Tuesday, according to CME's FedWatch tool.

Rate hike forecasts could be swayed by data expected 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 GDP.

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

Analysts estimate aggregate third-quarter S&P 500 earnings growth of 31.8% year-over-year, up from 30.6% as of Oct. 1, per LSEG.

Memory chipmaker Micron Technology jumped after South Korean rival SK Hynix reported a more than sevenfold jump in quarterly profit. SK Hynix's US-listed shares closed sharply higher.

The Philadelphia SE Semiconductor index outperformed the broader market, notching its fourth consecutive daily gain and bouncing back from its recent sell-off, which was fueled by worries regarding hyperscalers' massive investment in artificial intelligence.

"I think the market realizes 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 more than 4% in extended trading after posting quarterly results, while Alphabet shares dropped more than 7% in after-hours trading following the Google parent's earnings report.

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

U.S. 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 more than $100 per barrel, pushing up costs in other areas of the economy and driving inflation higher.

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