U.S. stock markets rallied following the Federal Reserve's decision to keep interest rates steady at 3.75% to 4% in the October 28 meeting, with the S&P 500 rising 0.28% to 7,743.98, the Dow Jones Industrial Average advancing 0.19% to 52,475.10, and the Nasdaq composite surging 0.27% to 26,549.85. According to reports from The Economic Times, the central bank held the federal funds rate steady in a 10-2 decision, with the Fed now upgrading its economic assessment to say the economy is growing at a 'strong pace'. The decision came after the Fed had raised rates by a quarter percentage point at the September meeting. The Federal Open Market Committee (FOMC) noted that 'while uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.'
The US dollar found stability on Thursday after the Federal Reserve held interest rates steady while hinting that upcoming inflation data would influence future policy moves. As reported by The Economic Times, the dollar index was at 102.26 after the greenback had held near two-week highs ahead of the announcement but turned lower after Fed Chair Kevin Warsh's press conference offered no clear steer on a December move. The euro eased 0.15% to $1.1134 in early Asian hours, while the dollar was up 0.14% at 158.045 yen against the Japanese yen. Traders are now pricing in a 78% chance of a hike in December, according to the FedWatch tool, though Warsh's dovish stance has pushed traders to rein in bets for rate hikes in 2027. Of the 12 FOMC voters, Governor Lisa D Cook and Cleveland Fed President Beth M. Hammack preferred to raise the target range for the federal funds rate by a quarter percentage point.
The bond market showed significant fluctuations following the Fed's decision, with the two-year Treasury yield initially climbing above 4.79% from 4.70% late Tuesday after the Fed announced the rate hold. As reported by The Economic Times, the yield quickly reversed course and dropped as low as 4.69% after Fed Chairman Kevin Warsh indicated the central bank wanted to see how conditions play out before making its next move. The 10-year Treasury yield rose to 5.02% from 4.99% late Tuesday, with yields also getting an upward nudge from rising oil prices as uncertainty continues about Middle East developments. The 2-year note yield fell as low as 4.678% after Warsh's press conference, though it was last down 2.3 basis points at 4.712% in Asian hours. Despite the rate pause, Fed Chairman Kevin Warsh emphasized the central bank's focus on 'price stability' and noted that employment scenarios have been 'quite positive.'
Several companies rallied Wednesday after beating analyst expectations for the summer quarter. According to The Economic Times, GE HealthCare Technologies climbed 6.6% after delivering both profit and revenue that surpassed analysts' expectations and raising its forecasts for revenue growth and other financial measures for the full year. Etsy rose 5.4% after its profit for the latest quarter blew past analysts' forecasts, with CEO Kruti Patel Goyal noting the online marketplace saw growth in active buyers from prior-year levels for the first time in two years. Wendy's jumped 15.1% after Trian Fund Management offered to buy the chain, helping offset a 5.8% drop for Boston Scientific despite the company reporting milder profit drops than expected. In the technology sector, Oracle expanded by 10.73% as the company targets $225 billion in revenue by 2030. Chip stocks were also trading higher, with SK Hynix up 13.30%, Micron Technology rising 5.86%, Arm Holdings gaining 4.10%, and Advanced Micro Devices (AMD) advancing 3.24%. Chilli's owner Brinker International rose 12.21% after the company raised its full-year guidance, raising adjusted earnings to $13.30 per share to $13.90 per share, compared to a FactSet consensus estimate of $13.28.
Fed Chair Kevin Warsh announced that the central bank would begin setting aside one of its eight regularly scheduled policy meetings next year and two in 2028 to weigh major issues facing the institution, with these meetings not used to consider changes in monetary policy. As reported by The Economic Times, analysts at TD Securities noted that 'the changing of meeting schedules for 2027 and 2028, where one and two of the eight meetings will discuss strategy not policy changes, respectively, reads as dovish to us.' The move is expected to produce potentially more extreme and inter-meeting moves down the line. With policy tightening already being priced in, market strategists expect yields to remain range-bound unless there is a clearer signal for more aggressive policy tightening. The Fed noted that 'inflation remains elevated. The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2% goal. The Committee will deliver price stability.'
