KEY POINTS

  • Federal Reserve kept rates unchanged at near zero
  • Pending home sales jumped 16.6% in June
  • European markets finished mixed

U.S. stocks climbed on Wednesday as the Federal Reserve kept interest rates unchanged but warned of serious risks to economy.

The Dow Jones Industrial Average gained 160.29 points to 26,539.57, while the S&P 500 rose 40 points to 3,258.44 and the Nasdaq Composite Index climbed 140.85 points to 10,542.94.

Wednesday’s volume on the New York Stock Exchange totaled 3.83 billion shares with 2,379 issues advancing, 121 setting new highs, and 628 declining, with 13 stocks setting a new low .

Active movers were led by Eastman Kodak Co. (KODK), General Electric Co. (GE) and Advanced Micro Devices Inc. (AMD).

The Fed said U.S. economic activity and employment “have picked up somewhat in recent months but remain well below their levels at the beginning of the year.”

The Fed added that “weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

“This [rate decision] was definitely in line with what we expected,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities.

But Eric Winograd, senior economist for fixed income at AllianceBernstein, was disappointed by the Fed’s statement.

“This is a Fed that tells us they’re going to use all their tools to support the economy, yet they continue to punt on doing anything in terms of monetary policy,” Winograd said. “They’re showing a sense of urgency to support financial markets. They’re not showing support to support the real economy.”

Pending home sales jumped 16.6% in June, according to the National Association of Realtors

Traders pored over a mixed bag of earnings reports from major companies, including Boeing (BA), General Electric (GE) and General Motors (GM). Boeing and GE both delivered wider-than-expected losses.

“It’s clear that the worst is over for corporate profits,” said David Lefkowitz, head of equities for the Americas at UBS Global Wealth Management. “However, the pace of the recovery is still contingent on the path of the virus and further government stimulus. In our view, this will be very important as a number of companies have called out how government support has been crucial to the recovery and businesses anticipate that more will be needed.”

Overnight in Asia markets finished mixed, as China’s Shanghai Composite index jumped 2.06%; Japan’s Nikkei-225 dropped 1.15% and Hong Kong’s Hang Seng Exchange fell 0.45%.

In Europe markets finished mixed, as Britain’s FTSE-100 edged up 0.04%, while France’s CAC-40 gained 0.6% and Germany’s DAX slipped 0.1%.

Crude oil futures gained 0.64% at $41.26 per barrel, Brent crude edged up 0.05% at $44.11. Gold futures rose 0.83%.

The euro rose 0.55% at $1.178 while the pound sterling climbed 0.44% at $1.2987.

The yield on the 10-year Treasury slipped 0.34% to 0.579% while yield on the 30-year Treasury gained 1.55% to 1.242%.

RELATED STORIES