1 month ago
Stock Market

Stocks - Dow Rallies on Upbeat Earnings, Cautious Fed

Investing.com - The Dow surged on Wednesday as a dovish Fed and upbeat earnings sparked a sea of green across

Investing.com - The Dow surged on Wednesday as a dovish Fed and upbeat earnings sparked a sea of green across across Wall Street.

The Dow Jones Industrial Average rose 1.8%, the S&P 500 added 1.56%, while the Nasdaq Composite surged 2.20%.

In the clearest sign yet that the Federal Reserve is in no hurry to hike rates, the central bank ditched its statement language committing to gradually raising rates, pledging to remain patient.

"In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes," the Fed said.

On the balance sheet, the Fed said it "is prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments."

The dovish language allayed investor fears the central bank will overshoot on monetary policy, adding further momentum to stocks, which were on course to close higher thanks to upbeat earnings.

Dow components Boeing (NYSE:BA) and Apple (NASDAQ:AAPL) surged after delivering results that topped estimates.

Apple's report cleared up some of doubts that had clouded investors' outlook on the tech giant and suggested that iPhone sales may have bottomed, analysts said.

"Importantly, Apple made investors feel better about several recent debates -- weaker iPhone demand, gross margin risk and services growth deceleration," Morgan Stanley (NYSE:MS) said.

"IPhone sales trends may have bottomed, supplier data points are likely overly negative due to Apple's inventory build," it added.

Boeing, widely viewed as key barometer for global growth given its international exposure, shrugged off the ongoing U.S.-trade spat as it beat consensus on both the top and bottom lines.

On the economic front, investors digested mixed economic data. The private sector created more jobs than expected. But weakness in housing continued as pending home sales slumped to their lowest level since April 2014.