Wall Street mixed after Fed decision

Yields eased significantly in the bond market following the move and Powell’s comments.

Traders themselves had already downgraded their expectations for rate cuts this year down to one or two, if any, after coming into the year forecasting six or more. That’s because they saw the same string of reports as the Fed, which showed inflation remaining stubbornly higher than forecast this year.

Powell had already recently hinted rates may stay high for a while as Fed officials wait for more confirmation inflation is heading down toward their 2 per cent target. That was a disappointment for Wall Street, after the Fed earlier had indicated it was penciling in three cuts to rates during 2024.

Without the benefit of easing rates, which can goose the economy and investment prices, companies will need to deliver better profits.

Amazon jumped 2.3 per cent after it reported stronger profit for the latest quarter than analysts expected. The retail behemoth credited reaccelerating growth at its cloud-computing business, in part, as it benefits from demand for AI.

Chemical producer DuPont was another winner, up 8 per cent, after reporting stronger profit than expected. It said demand from customers in the semiconductor industry continued to recover.

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CVS Health tumbled 16.8 per cent after reporting weaker results for the latest quarter than analysts expected. It said it’s been hurt by increased costs at its Medicare Advantage business, and it cut its forecast for profit over the full year.

Starbucks dropped 15.9 per cent after falling short of expectations for both profit and revenue in the latest quarter. Sales trends weakened at its stores outside the United States in particular, and it cut its full-year forecasts for profit and revenue.

Super Micro Computer, which has been one of Wall Street’s hottest stars, gave back 14 per cent despite topping expectations for profit. The company, which sells server and storage systems used in AI and other computing, fell shy of analysts’ forecasts for revenue. Expectations had built up after its stock had already tripled this year amid a broader frenzy on Wall Street around artificial-intelligence technology.

Advanced Micro Devices dropped 8.9 per cent despite reporting profit that matched expectations. Its revenue came in a bit shy of forecasts, as did the midpoint of its forecasted range for revenue in the current quarter.

Before the Fed’s announcement, stocks and Treasury yields had been moving relatively little following some weaker-than-expected reports on the economy.

One report from the Institute for Supply Management said the US manufacturing sector unexpectedly fell back into contraction last month. Economists had been looking for one of the hardest-hit areas of the economy to stay steady. Perhaps more concerningly, manufacturers also reported prices were rising at a faster rate.

A separate report said US employers were advertising slightly fewer jobs at the end of March than economists expected. The hope on Wall Street has been that a cooldown in the number of openings could help keep the job market in check, not allowing it to get so hot that it adds upward pressure on workers’ wages and inflation overall. The downside is that if it weakens too much, a major support for the economy could give out.

In stock markets abroad, many exchanges were shut for holidays. Tokyo’s Nikkei 225 slipped 0.3 per cent, and London’s FTSE 100 fell 0.3 per cent.