The S&P 500 gained 0.2% on Wednesday after the Federal Reserve left interest rates unchanged, while the Dow Jones Industrial Average traded 542 points lower. Three Fed officials dissented in favor of a hike, and futures put a 63% likelihood on a quarter-point raise at the September meeting.
The S&P 500 gained 0.2% on Wednesday as big tech stocks rose and the Federal Reserve, in a widely anticipated move, left rates unchanged. The Nasdaq Composite rose 0.5%.
Megacaps did much of the lifting in afternoon trading. Google-parent Alphabet advanced more than 2%, while Apple and Microsoft each gained more than 1%. The Dow, by contrast, traded 542 points lower, or 1%.
Three officials voted to raise rates
The Fed stuck to the sidelines, and dissents in favor of a rate hike suggested a hawkish bent at the central bank. Cleveland Fed President Beth Hammack, Neel Kashkari of the Minneapolis Fed and Dallas Fed's Lorie Logan all voted to raise rates. The decision left the benchmark rate in the 3.50%-3.75% range, with the three dissenters among 12 members of the policy-setting Federal Open Market Committee who preferred a quarter-percentage-point hike at this meeting.
Fed funds futures were last pricing in a 63% likelihood of a quarter-point raise at the September meeting, according to the CME FedWatch Tool. According to CNBC, Fed Chair Kevin Warsh said the committee would act where necessary and appropriate: "we will not hesitate to act".
Chip stocks extend a four-session slide
Semiconductors fell, with the iShares Semiconductor ETF (SOXX) last down nearly 3%. The group is coming off four straight losing sessions, down 9% week to date, amid growing anxiety over the return on massive artificial intelligence spending, as well as fears of greater competition from China. Micron Technology dipped 6%, while Advanced Micro Devices slipped more than 3%.
Ahead of the Fed's announcement, the benchmark S&P 500 had hit its lowest level in a month. Strong earnings forecasts and Wall Street's recent decline have left the index trading at about 20 times expected earnings, just above its 10-year average of 19, according to LSEG data.
Sources: CNBC, Investing.com (Reuters)
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