The Federal Reserve’s decision yesterday to hold interest rates, amid signals that it might raise them in December, helped to push Wall Street sharply upwards.
Stocks initially sold off following the statement, with the S&P 500 erasing close to a one per cent gain, but quickly rebounded to end at the day’s highs as investors saw the statement as a sign the Fed has confidence the US economy can sustain a rate hike.
“Obviously the first move [in stocks] is down, which is conventional wisdom. However, I do like the idea of the Fed having more confidence in the economy, less concerned about the global backdrop and willing to ring the bell on the long-term health of the US economy with a rate hike,” said Michael Marrale, head of research, sales and trading at ITG in New York.
The Dow Jones industrial average rose 198.09 points, or 1.13 per cent, to 17,779.52, the S&P 500 gained 24.46 points, or 1.18 per cent, to 2,090.35, its highest in more than two months.
The Nasdaq Composite added 65.55 points, or 1.3 per cent, to 5,095.69, while the Nasdaq 100 index of biggest non-financial names rose 0.9 per cent to 4,678.57, just shy of a 15-year high.
A 4.1 per cent gain in Apple’s shares to $119.27 also helped to support indices a day after stronger-than-expected results.
The company sold 48m iPhones in the latest quarter and posted a near doubling of revenue from China, allaying concerns about its business in the world’s second-largest economy.
On the flip side, Twitter shares fell 1.5 per cent to $30.87 while Akamai Technologies dropped 16.7 per cent to $62.91. Both reported disappointing results late on Tuesday. After the bell, shares of GoPro dropped 15.2 per cent to $25.62 following its results.