Wednesday's Stock Market Open: US Equities Rise Ahead of Fed Decision, Statement, 1Q GDP Sank 4.8%

Update 12:05 p.m. EDT:

U.S. stocks continued to move higher in volatile trading as of noon Wednesday.

The Dow Jones Industrial Average surged 548.36 points to 24,649.91, while the S&P 500 gained 73 points to 2,936.39 and the Nasdaq Composite Index rose 267.06 points to 8,874.79.

In Europe markets closed higher, as Britain’s FTSE-100 gained 2.63%, France’s CAC-40 climbed 2.22% and Germany’s DAX rose 2.89%.

West Texas Intermediate crude oil futures jumped 30.88% at $16.15 per barrel, Brent crude rose 7.08% at $24.35.

Original story:

U.S. stocks rose on Wednesday ahead of a widely anticipated policy decision and statement by the Federal Reserve at 2 p.m. EDT.

The Dow Jones Industrial Average surged 453.65 points to 24,555.20, while the S&P 500 gained 59.47 points to 2,922.86 and the Nasdaq Composite Index rose 198.55 points to 8,806.28.

U.S. gross domestic product shrank by 4.8% in the first quarter, even worse than consensus expectations of a 3.5% decline.

Diane Swonk, chief economist at Grant Thornton, tweeted: “The contraction in consumer nondurable goods and services was even greater than the losses in big ticket spending. Housing held up better as contracts in the pipeline were closed. There was a sharp drop in mortgage applications for purchase in March and credit [conditions] tightened.”

Some observers expect the second quarter of 2020 to be far worse.

"You're looking at something like minus-20% to minus-30% in the second quarter," said White House economic adviser Kevin Hassett on Monday. "[The pandemic is] the biggest shock since the Great Depression. It’s a very grave shock and it’s something we need to take seriously.”

The Congressional Budget Office predicted that second quarter GDP could fall by as much as 40%, the worst such performance since 1947.

President Donald Trump said on Tuesday that the U.S. will “very soon” run 5 million coronavirus tests per day.

Spain, hard hit by the coronavirus, said it will need at least eight more weeks to fully lift its lockdown.

“It doesn’t look like the Fed will raise interest rates beyond 0% until well past the pandemic, which we think might be around 2023,” said Jim Caron, head of global macro strategies at Morgan Stanley Investment Management. “The market is pricing a recovery that starts in [the third quarter], but there’s wide variability, and we need the Fed to give its input.”

Gilead Sciences (GILD) reported ‘positive data’ in its remdesivir coronavirus drug trial.

General Electric (GE)’s first-quarter revenue declined by 8% and it expects second quarter to be worse.

Boeing (BA) recorded a first-quarter loss of $641 million and also said it burned through $4.3 billion in cash during the quarter

“We have some very extreme readings on the blow we’ve just suffered and markets are still bouncing around trying to get a reading on where we will be in the third and fourth quarter,” said Christopher Smart, chief global strategist at Barings Investment Institute. “That is very hard right now without knowing where the [virus] will be, and how quickly people will feel comfortable going back to work, going back to stores, between now and when there might be a vaccine.”

Overnight in Asia, markets rose moderately. China’s Shanghai Composite rose 0.44%, Hong Kong’s Hang Seng edged up 0.28% and Japan’s Nikkei-225 was closed for holiday.

In Europe markets traded higher, as Britain’s FTSE-100 gained 2.18%, France’s CAC-40 climbed 1.57% and Germany’s DAX rose 1.93%.

Crude oil futures jumped 26.09% at $15.56 per barrel, Brent crude rose 7.83% at $24.52. Gold futures slipped 0.59%.

The euro rose 0.43% at $1.0866 while the pound sterling edged up 0.12% at $1.2441.