Stocks finished higher Wednesday, as investors digested the Federal Reserve policy decision. As widely expected, central bank policymakers voted to leave the benchmark interest rate unchanged following the conclusion of the FOMC meeting. However, the Fed’s statement omitted a reference to being “patient,” and indicated the possibility of rate cuts by year-end. Fed Chair Jerome Powell commented that “the case for somewhat more accommodative policy has strengthened,” referencing “uncertainties” in the economic outlook, as well as muted inflation. The S&P 500 gained 0.3%, leaving the benchmark index up more than 6.3% so far in June. The Dow climbed 38 points, while the Nasdaq Composite was up 0.4%.
Treasuries erased earlier losses, and the U.S. dollar declined by the most since March following the Fed decision and post-meeting press conference. The yield on the 10-year note dipped three basis points to 2.03%, while the yield on the more Fed-sensitive two-year note slumped 12 basis points to 1.75%. Fed-fund futures data from CME Group now suggest traders fully pricing in at least one 25 basis point rate cut at the Fed’s July meeting.
Seven of 11 S&P 500 sectors closed in positive territory, with Health Care stocks pacing gains, up nearly 1%. Energy shares lagged, despite WTI crude advancing 1% to $54.41/barrel after data showed crude stockpiles declined by more than expected in the most recent week. In earnings, Adobe climbed 5.2% after the software maker topped analyst estimates on both the top and bottom line and maintained its full-year guidance.