The S&P 500 closed near the flatline on Wednesday after Federal Reserve Chairman Jerome Powell said substantial economic improvement is needed for the central bank to start dialing back its easy-money policies.
The broad equity benchmark erased earlier losses and ended the session little changed at 4,400.64. The tech-heavy Nasdaq Composite climbed 0.7%. The Dow Jones Industrial Average dipped 128 points. The major averages pulled back from their records in the previous session, snapping a five-day winning streak.
Google-parent Alphabet popped more than 3% after the tech giant posted quarterly results, registering a 69% jump in advertising revenue. Boeing shares climbed 4.2% after the manufacturer posted its first profit since the third quarter of 2019 thanks to a rebound in aircraft deliveries.
The Federal Open Market Committee kept interest rates in a target range near zero, reiterating its view that the economy continues to “strengthen” despite the spread of the delta coronavirus strain. Still, Powell stressed that the economy a good deal away from achieving the Fed’s dual mandates of stable prices and maximum employment.
“We have some ground to cover on the labor market side,” Powel said in a press conference. “I think we’re some way away from having had substantial further progress toward the maximum employment goal. I would want to see some strong job numbers.”
The central bank started purchasing at least $120 billion a month in bonds and other securities in December until “substantial further progress” had been made on employment and inflation.
“Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings,” the post-meeting statement said.
Powell noted the rising threat that the pandemic and its delta variant is posing, but he said he does not see it having a major economic impact.
“Fed’s continued patience is being cheered by the markets,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network. “There was acknowledgement of continued progress towards the Fed’s goals, but there is ways to go before the Fed can be nudged to act.”
The market is in the middle of a strong earnings season. Of the S&P 500 companies that have reported quarterly results thus far, 89% have topped earnings estimates, while 86% have exceeded revenue expectations, according to data from Refinitiv.
Pfizer shares rose about 2% after the company reported stronger-than-expected earnings and raised its 2021 sales forecast for the Covid vaccine.
Apple shares dipped 0.4% after CEO Tim Cook warned that silicon “supply constraints” will affect sales the iPhone as well as the iPad. The company did beat top- and bottom-line estimates and said iPhone sales surged 50% year over year.
The major averages are on track to end the month higher. The S&P is up 2.4% for July, while the Nasdaq Composite and Dow have gained 1.1% and 1.6%, respectively.
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