The Fed, as expected, held interest rates steady, citing the need for more data in the fight against inflation despite persistently elevated pricing pressure. Two dissenting members of the panel voted for an immediate interest rate increase.
Major US indices spent most of the day in positive territory but traded within a fairly narrow range. The broad-based S&P 500 finished up 0.3 percent.
Art Hogan of B Riley Wealth Management said the market’s biggest priority this week is sifting through a deluge of earnings, including Microsoft and Google parent Alphabet, two of the biggest companies in artificial intelligence.
The tech results are “100 percent the focus,” said Hogan. “The market is taking a ‘nothing to see here’ attitude towards what the Fed did today.”
Citing higher energy prices in recent weeks, Fed Chair Kevin Warsh said “our job is to ensure that relative price changes in some sectors do not broaden out across the economy,” Warsh said at a news conference.
Still, he said the Fed needed more information in the coming weeks to “determine the policy stance appropriate to ensure a timely return of inflation to the two-percent goal.”
The AI trade enjoyed a broad lift earlier on Wednesday from blockbuster earnings from the South Korean chip giant SK hynix, which soared almost 11 percent, helping to lift Seoul’s Kospi index more than six percent.
SK hynix, a specialist supplier of high-bandwidth memory chips to US industry behemoth Nvidia, unveiled plans to return an additional US$45 billion to shareholders after reporting operating profits about seven times the year-ago level.
The global race to build AI data centres has transformed the company’s fortunes, despite concerns that the sector may be overvalued.
The report by SK hynix added to optimism surrounding the sector after Anthropic, the creator of Claude AI, said on Monday that its first-half revenue surged about 1,300 percent and flagged heavy capital spending ahead, fuelling enthusiasm ahead of an expected IPO next month.
AI stocks took a beating earlier this month over worries about the massive investments and debt levels in the sector, but then welcomed Anthropic’s IPO.
In other markets, oil prices moved higher following reports that the United States is planning to mount a new military attack in Iran after the US midterm elections.
Gains in the US dollar, meanwhile, moderated after Fed Chair Kevin Warsh’s press conference.
Warsh is saying the Fed’s first interest rate hike in September “had a large impact, which indicates that he doesn’t think the Fed has that much more to do,” said Adam Button, currency analyst at investingLive.
The S&P 500 rose 0.3 percent, to 7,744, the Dow rose 0.2 percent, to 52,475, while the Nasdaq rose 0.3 percent, to 26,550. (AFP)
