U.S. equities finished higher on Wednesday after the Federal Reserve left its benchmark interest rate unchanged, while market participants turned their attention to upcoming quarterly reports from major technology firms and fresh inflation data.
The Dow Jones Industrial Average advanced 97 points to close at 52,475.10. The S&P 500 rose 0.28% to 7,743.98, and the Nasdaq Composite gained 0.27% to 26,549.85.
Fed Holds Rates Steady
The Federal Open Market Committee kept the federal funds rate in a range of 3.75% to 4%, a decision widely anticipated by investors. The central bank upgraded its language on economic activity but reiterated that inflation remains elevated.
This pause follows September's quarter-point hike, which was the first increase since 2023. Looking ahead, futures markets now assign a higher probability to another move in December. According to CME's FedWatch tool, the likelihood of a 25-basis-point hike in December rose to 87.4%, up from 78.3% on Tuesday.
Arthur Azizov, CEO of B2BROKER Group, called the decision reasonable given the constraints facing policymakers. He noted that inflation is largely driven by oil supply issues that interest rates cannot address, and a weak labor market limits the scope for tighter policy. He also pointed to the upcoming midterm elections as a reason for caution.
Azizov suggested the decision could provide some support for equities and gold, though he did not rule out a December increase. Future moves, he said, will depend on oil prices and labor market data.
Investors will receive further economic signals on Thursday, including the September personal consumption expenditures price index—the Fed's preferred inflation gauge—and an advance estimate of third-quarter GDP.
AI Earnings and Chip Rally
Technology shares tied to artificial intelligence buoyed the market as investors awaited earnings from Microsoft and Alphabet after the close. Oracle jumped more than 11% after projecting fiscal 2030 revenue of at least $225 billion and capping additional capital raises at $20 billion between fiscal 2027 and 2030.
Semiconductor stocks also advanced following SK Hynix's report of a more than sevenfold increase in quarterly profit. Micron Technology gained, and the Philadelphia Semiconductor Index posted its fourth consecutive daily rise.
The gains come after recent concerns about the scale of AI infrastructure spending weighed on tech shares. Investors are now assessing whether heavy investment in computing capacity will translate into sustainable returns.
Earnings season has been broadly positive so far. Roughly 200 S&P 500 companies have reported third-quarter results, with 84% beating consensus estimates, according to LSEG data. Analysts project aggregate earnings growth of 31.8% year over year.
Oil and Individual Stock Movers
Oil prices rose after Iran-backed Houthi forces attacked a refinery in Saudi Arabia, heightening supply disruption concerns. Higher energy costs have added to inflationary pressures since the Iran war began.
In individual stocks, Vertiv advanced after beating quarterly expectations and raising its full-year revenue and profit forecasts. Robinhood fell after weaker cryptocurrency activity contributed to a profit miss, while Boston Scientific declined after cutting its annual profit outlook.
The market's next direction will hinge on incoming inflation data, expectations for the Fed's December decision, and results from major technology companies. Investors will also continue to evaluate whether AI-related spending can sustain earnings growth amid elevated costs and financing requirements.
This article is for informational purposes only and does not constitute financial advice.
