The main indexes on the New York Stock Exchange ended the trading session today with increases after the US Federal Reserve’s Open Market Committee announced it would keep unchanged key interest rates by the end of the year.
The blue-chip index Dow Jones Industrial Average, which tracks stock trading of the 30 largest US public companies, advanced by 73.82 points, or 0.28%, to 26,539.36 points. The broader S&P 500 increased by 0.41% to 2,929.80 points. The technology benchmark Nasdaq Composite rose by 0.48% to 7,992.17 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 5.41% to 14.33 a new 1-month low.
After the end of its two-day meeting, the Federal Open Market Committee announced it would keep unchanged its key interest rates by the end of this year. The members of the committee voted 9 against 1 to keep the basic rate in the range of 2.25-2.50%, which was increased by a quarter of a percentage point in December 2018.
Traders are pricing in easier monetary policy as soon as July. They were also betting on rate cuts coming in September and December, according to the CME Group’s FedWatch tool. Expectations of lower rates helped the market rebound this month after a torrid performance in May.
In the baseline scenario, the FOMC said they still expect a “prolonged expansion of economic activity” and move to a 2% inflation rate, while realizing that “uncertainty about this outlook has increased”.
In the bond markets, the yields on 10-year and 30-year US Treasuries fell to 2.034% and 2.543%, respectively.
Corporate stocks performance
Apple’s stock declined by 0.29% after it became clear that the technology giant was considering shifting between 15% and 30% of its production capacity from China to other countries against the backdrop of the growing trade disputes between Washington and Beijing. The management of the company has asked its major suppliers to estimate the costs of exporting China from other countries and more specifically to Vietnam, India, Indonesia, Malaysia, and Mexico, as well as to analyze the prospects for starting a business in them.
UnitedHealth Group Incorporated and Walt Disney Company were among the best performers among the blue-chips adding 1.8% and 1.2%, respectively.
Health care stocks, which typically perform well after the Fed cuts rates, were the best performers on Wednesday. The sector rose 1%, led by gains in Allergan and DaVita.
Allergan jumped 6.23% after the drugmaker said its constipation drug, jointly developed with Ironwood Pharmaceuticals Inc, improved symptoms in patients suffering from irritable bowel syndrome with constipation.
Adobe Inc gained 5.2% after the Photoshop software provider beat analysts’ estimates for quarterly profit and revenue.
The shares of EQT Corporation fell to 5-year lows, down by 5.01%.
The stocks of aircraft manufacturer Boeing fell by 1.44% amid the debate over the factors that may have contributed to two 737 Max plane crashes consumed a House hearing Wednesday, as two pilots criticized Boeing’s design and rollout of the aircraft and some lawmakers questioned the qualifications of the foreign pilots involved in the crashes.
The top performers on the S&P 500 were Pacific Gas & Electric Co (+7.16%), Allergan PLC (+6.21%) and Adobe Systems Incorporated (+5.21%), while on the flip side were Mattel Inc (-5.39%), EQT Corporation (-5.01%) and Chesapeake Energy Corporation (-3.68%).
Corporate earnings reports
American Software came out with quarterly earnings of 0.09 USD per share, beating the analysts’ estimates of 0.06 USD per share. This compares to earnings of 0.04 USD per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 50%. A quarter ago, it was expected that this enterprise software provider would post earnings of 0.07 USD per share when it actually produced earnings of 0.10 USD, delivering a surprise of 42.86%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. American Software posted revenues of 26.27 million USD for the quarter ended April 2019, compares to year-ago revenues of 29.36 million USD. The company has not been able to beat consensus revenue estimates over the last four quarters.
Oracle reported better-than-expected earnings for the fourth quarter of its 2019 fiscal year, which ended on May 31. The company revenue rose 1% YoY in the quarter to 1.14 billion USD, versus 10.93 billion USD expected by analysts. Oracle’s largest business segment, Cloud Services, and License Support, delivered 6.80 billion USD n revenue, above the 6.76 billion USD consensus estimate among analysts polled by FactSet. The Cloud License and On-Premise License segment had 2.52 billion USD in revenue, over the 2.32 billion USD FactSet consensus estimate. In the statement, executives pointed to growth in cloud applications like NetSuite and Fusion.