Federal Reserve's policy-making committee reiterated it plans to remain patient
U.S. stocks ended Wednesday's choppy trading session sharply lower on 28 January 2015 after the Federal Reserve's policy-making committee reiterated it plans to remain patient and watch the data as it decides when to raise interest rates. The stock market finished the midweek session on a lower note despite showing considerable strength in the early going. Sharp losses added to declines from Tuesday, when markets sold off after disappointing earnings and economic data.
The Dow Jones Industrial Average dropped 195.84 points, or 1.1%, to 17,191.37. The Nasdaq Composite turned a big opening advance into a loss by the end of the session, falling 43.50 points, or 0.9%, to 4,637.99, as Apple's big gain was not enough to keep the index in the green. The S&P 500 closed 27.39 points, or 1.4%, lower at 2,002.23,
All 10 main sectors finished in the red led by the energy sector. Twenty seven out of thirty Dow components ended lower led by Chevron, Exxon Mobil and Microsoft. Boeing was one of the three winners. The Fed gave no sign that it is wavering on hiking interest rates some time in the second half of 2015. The Fed described U.S. economic growth as 'solid' while categorizing job growth as 'strong.' The central bank did not spend much time discussing overseas developments, which could help explain some of the selling that developed after the statement was released. Furthermore, the FOMC showed little concern over low inflation, saying that while the price level is expected to decline in the near term, a gradual return to 2.0% should follow once the 'transitory effects of lower energy prices and other factors dissipate.' The statement was taken as hawkish and sent the dollar and Treasurys sharply higher, as investors sought the safety of havens.
Economic data was limited to the weekly MBA Mortgage Index, which fell 3.2% to follow the prior week's surge of 16.1%.
Apple's earnings surprised even the most bullish ana Apple shares jumped 5.7% after the company reported another record for its flagship iPhone, with 74.5 million phones sold in the fiscal first quarter. Profit rose 38% to a record high.
Among other stocks under focus, shares of Boeing gained 5.4% after the company's fourth-quarter earnings beat forecasts. Yahoo initially jumped after the Internet search engine late Tuesday said it would spin off its Alibaba Group stake into a separate publicly traded company. However, stock finished 3.2% lower.
It was mixed finish for precious metals on Wednesday, 28 January 2015 at Comex. Gold prices fell on Wednesday as the U.S. central bank reiterated its commitment to raising interest rates some time in the latter part of the year but the precious metal pared some of its earlier losses after the Federal Reserve's policy statement. Silver rose.
March gold lost $6.50/oz to $1285.60/oz, while Mar silver rose $0.01 to $18.09/oz on Wednesday.
Crude prices registered a big drop in prices on Wednesday, 28 January 2015 at Nymex. Oil futures fell on Wednesday after a larger-than-expected increase in U.S. crude supplies, which kept inventories at their highest level in 80 years. Oil prices have fallen nearly 60% since the summer as the market struggles with a global supply glut and weakening demand. Several investment banks cut their price forecast for crude, with Barclays one of the latest to do so.
Light, sweet crude for March delivery dropped $1.78, or 3.9%, to $44.45 a barrel on the New York Mercantile Exchange. That was crude's lowest settlement since March 11, 2009.
In the latest weekly inventory report, the U.S. Energy Information Administration said earlier Wednesday U.S. oil supplies rose by 8.9 million barrels in the week ended 23 January 2015. Market had expected an increase around 3.5 million barrels. At 406.7 million barrels, U.S. inventories are at their highest since 1924.
The report also showed that gasoline inventories dropped by 2.6 million barrels, whereas distillates supplies dropped by 3.9 million barrels. Market had expected gasoline stockpiles up 830,000 barrels, and distillate stockpiles down 580,000 barrels. Refineries operated at 88% of capacity that week, and gasoline production decreased to 9.2 million barrels a day.
Today's participation was a little above average with 835 million shares changing hands at the NYSE floor.
Tomorrow, weekly Initial Claims will be reported at 8:30 ET (consensus 301K) while the Pending Home Sales report for December (0.6%) will be released at 10:00 ET.
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