U.S. stocks ended mixed on Wednesday after coming off their session highs. Investors were encouraged by the Federal Reserve’s plan to slow the pace of its balance sheet runoff and Chair Jerome Powell’s statement that the next policy move was unlikely to be a rate hike.
The Fed’s decision to leave its key policy rate unchanged was expected, but Powell’s comments at a press conference caused Wall Street’s major averages to surge briefly before losing momentum by the end of the trading session.
The Nasdaq Composite dropped 0.33%, the S&P 500 slipped 0.35%, and the Dow gained 0.23%. Six out of 11 S&P sectors ended in the red.
The Fed kept its federal funds rate steady at 5.25%-5.50% and noted a lack of progress towards its 2% inflation target. Powell mentioned that gaining confidence to cut interest rates would take longer than expected, but also stated that the Fed’s next move was unlikely to be a rate hike.
The Fed’s plan to slow the decline of its securities holdings starting in June was met with positivity from markets, leading to lower Treasury yields as traders bought bonds.
Overall, investors had to digest a range of earnings reports and economic data, with mixed results on the labor market and manufacturing fronts. Despite strong results from some companies, the overall sentiment was somewhat negative, with setbacks in U.S. manufacturing activity in April.