The main indexes on the New York Stock Exchange ended the trading session with gains after the impulse received from the decision of the US Federal Reserve to keep the interest rates unchanged and hinting that it could cut them in July if needed.
The blue-chip index Dow Jones Industrial Average added 249.17 points, or 0.94%, to 26,753.17 points.
The broader S&P 500 advanced by 27.72 points, or 0.95%, to a record 2,954.18 points. Before closing the session, the index reached a historical level of 2,958.08 points. The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 2.93% to 14.75.
The technology Nasdaq Composite rose by 0.80% to 8,051.34 points.
Stocks resilience in the face of growing US-Iranian geopolitical tension is a stark reminder not to fight the Fed. The US Federal Reserve announced on Wednesday night that it is not expecting interest rate cuts in 2019 but hinted that its policy rate may change depending on economic conditions. The regulator’s decision was taken against the background of different opinions on what is to come by the end of the year. While Powell stayed mum about whether the Fed’s July meeting would bring the first rate cut, the market is now certain that it will happen. Expectations for a July cut rose to 100% yesterday, according to the CME’s FedWatch tool.
On the bond markets, the yields on 10-year US Treasuries declined to 2.02%, while 30-year declined to 2.52%.
Corporate stocks performance
Energy shares got a boost from higher oil prices. The Energy Select Sector SPDR Fund (XLE) climbed 2.2% as shares of Exxon Mobil gained 1.7%. Oil prices surged 5.4% after a US official said a drone was shot down over Iranian airspace. The shares of General Electric also added 2.8%.
The stocks of Oracle grew by more than 8% after the company released a financial report that surpassed analysts’ expectations. Using the positive impulse from the sector, the shares in Cisco Systems rose to 5-year highs, adding 2.28%.
Akero Therapeutics shares jumped by 15% to 18.32 USD on the biotechnology firm’s first day of trading as a public company. Akero priced its shares at 16 USD for its initial public offering.
Meanwhile, Slack Technologies shares surged more than 40% in their first day of trading. The stock closed above 38 USD after setting a reference price of 26 USD.
FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google) were also into the green, reporting gains between 0.4% and 1.1%.
The stocks of Boeing gained 1.7% amid continuing Paris Air Show and presentation of its autonomous air taxi.
The top performers on the S&P 500 were Pacific Gas & Electric Co (+14.90%), Oracle Corporation (+8.22%) and Chesapeake Energy Corporation (+7.92%), while on the flip side were Carnival Corporation (-7.63%), Alaska Air Group Inc (-3.37%) and American Airlines Group (-3.19%).
Corporate earnings reports
Open source software company Red Hat, which is on the way to becoming a part of International Business Machines (IBM), reported higher revenues for the first quarter. First-quarter net income was 141 million USD or 0.76 USD per share, compared to 113 million USD or 0.59 USD per share in the same period of last year. Adjusted earnings increased 39% to 1 USD per share and came in above the estimates. The revenue grew by 15% year-over-year to 934 million USD, exceeding expectations. Subscription revenue, the main growth driver, was 815 million USD, up 15% from last year. Revenues from application development and emerging technology subscription advanced 24% to 235 million USD.