Wednesday's Stock Market Close: US Equities Close Mixed As Fed Keep Rates Unchanged

U.S. stocks closed mixed on Wednesday, paring early gains, as investors focused upon some strong corporate earnings and the Federal Reserve’s decision to keep rates unchanged, while watching for new developments in China’s deadly coronavirus outbreak.

The Dow Jones Industrial Average gained 11.6 points to 28,734.45 while the S&P 500 slipped 2.84 points to 3,273.40 and the Nasdaq Composite Index advanced 5.48 points to 9,275.16.

Volume on the New York Stock Exchange totaled 2.96 billion shares with 1,519 issues advancing, 199 setting new highs, and 1,410 declining, with 56 setting new lows.

Active movers were led by General Electric Co. (GE), Advanced Micro Devices Inc. (AMD) and Apple Inc. (AAPL).

As expected, the Federal Reserve kept the target range for the federal funds rate unchanged at 1.5% to 1.75%. The Fed cited that “the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.”

In a press conference afterward, Federal Chairman Jerome Powell said: “It’s a bit surprising that with sustained levels of historically low unemployment, we haven’t seen wages moving up above that level as we have in other long expansions and other periods of low unemployment.”

In a reference to the virus outbreak in China, Powell stated: “Uncertainties about the [economic] outlook remain, including those posed by the new coronavirus.”

The death toll from the coronavirus has climbed to 132 with total cases in China now exceeding 6,000. Various airlines have either suspended or reduced flights to and from mainland China. Many foreign companies have reduced operations in China or curtailed business trips to the country.

U.S. President Donald Trump has formally signed the U.S. Mexico Canada Agreement, which replaces the old North American Free Trade Agreement.

Apple (AAPL) gained 2.09% after it posted first quarter fiscal 2020 revenue and earnings that blew past analysts’ expectations.

“Apple pleasantly surprised investors on multiple fronts, but most importantly materially exceeded investor expectations on iPhone revenues, which returned to growth in the quarter much ahead of investor expectations,” J.P. Morgan analyst Samik Chatterjee said in a note.

General Electric (GE) surged 10.32% after it delivered fourth quarter earnings on Wednesday that beat analyst expectations.

“Like every earning season, you get a point in time where you shift from a macro focus to a micro focus. That seems to be the case today,” said Art Hogan, chief market strategist at National Securities. “That’s okay, because the macro focus really has been Chinese coronavirus, and what eventual economic damage that might do. The market has done a pretty efficient job of picking the sectors that are likely to be hit the hardest and really punishing that group.”

U.S. trade deficit in goods surged by 8.5% in December to $68.3 billion from $63 billion in November, the government said Wednesday.

The National Association of Realtors said on Wednesday its pending home sales index fell unexpectedly by 4.9% to a reading of 103.2.

Markets in mainland China remained closed for the lunar new year holiday, but Hong Kong‘s Hang Seng index plunged 2.82% and Japan’s Nikkei-225 gained 0.71%.

In Europe markets finished higher, as Britain’s FTSE-100 gained 0.04%, France’s CAC-40 rose 0.49% and Germany’s DAX also climbed 0.16%.

Crude oil futures slipped 0.6% at $53.16 per barrel and Brent crude edged down 0.24% at $58.77. Gold futures rose 0.39%.

The euro edged down 0.16% at $1.1003 while the pound sterling fell 0.11% at $1.3013.

The yield on the 10-year Treasury dropped 2.86% to 1.594% while yield on the 30-year Treasury fell 2% to 2.053%.