US Wall Street extends gain as Fed softens hawkish stance

The US stocks climbed up sharply in late afternoon trade on Wednesday, 04 May 2022, with the Dow, the S&P500, and the Nasdaq indexes all closing notable higher, as appetite for risk assets underpinned after Federal Reserve Chair Jerome Powell indicated the central bank does not plan to raise interest rates as aggressively as some had feared.

The comments from Powell came after the Fed announced its widely expected decision to raise interest rates by half a percentage point in an effort to return elevated inflation to its 2% objective. The Fed announced that it has decided to raise the target range for the federal funds rate by 50 basis points to 0.75% to 1% and said it anticipates that ongoing increases in the target range will be appropriate. Fed Chair Jerome Powell said policymakers were ready to approve similar-sized rate hikes at upcoming policy meetings in June and July. Powell also said the Fed was not "actively considering" a 75 basis-point rate hike, tempering some market expectations for an aggressive tightening path.

 

In addition, the Fed decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1. It would begin shrinking the central bank's $9 trillion asset portfolio next month in an effort to further lower inflation.

At the close of trade, the Dow Jones Industrial Average index advanced 932.27 points, or 2.81%, to 34,061.06. The S&P500 index was up 124.69 points, or 2.99%, to 4,300.17. The tech-heavy Nasdaq Composite Index grew 401.10 points, or 3.19%, to 12,964.86.

Advancing stocks outnumbered declining ones on the NYSE exchange by 2708 to 613 and 140 closed unchanged. In the NASDAQ, 3452 issues advanced, 1349 issues declined, and 258 issues unchanged.

All 11 major S&P 500 sector indexes advanced, with top performing issues were energy (up 4.11%), communication services (up 3.68%), information technology (up 3.51%), materials (up 3.24%), and financials (up 3.02%).

Company news: Starbucks Corp rose 9.9% after the coffee chain saw quarterly comparable sales grow 12% in North America.

Livent Corp shares gained 30.2% after it posted a better-than-expected quarterly profit and bolstered its 2022 revenue outlook on higher demand for lithium used in electric vehicle batteries.

Lyft Inc shares plummeted 30% amid concerns about the company's ridership and spending. The ride-hailing company reported first-quarter revenue of $875 million, a 44% increase over the previous year.

ECONOMIC NEWS: Institute for Supply Management Services PMI fell to 57.1 in April from 58.3 in March, although a reading above 50 still indicates growth in the sector.

A separate report released by payroll processor ADP showed U.S. private sector job increased by 247,000 jobs in April after jumping by an upwardly revised 479,000 jobs in March.

The Commerce Department also released a report showing the U.S. trade deficit widened to a new record $109.8 billion in March from a revised $89.8 billion in February.

COMMODITY NEWS: Crude oil extended gains on Thursday after the European Union, the world's largest trading bloc, outlined plans to phase out imports of Russian oil. U.S. crude futures gained 0.4% to $108.21 a barrel and Brent rose 0.36% $110.54.

Among Indian ADR, Wipro advanced 0.93% to $6.49, WNS Holdings added 3.67% to $81.11, INFOSYS added 1.93% to $20.61, ICICI Bank rose 0.05% to $19.38, and Azure Power Global added 0.54% to $14.98. Dr Reddy's Labs fell 1% to $52.94, Tata Motors fell 1.68% to $28.07, and HDFC Bank fell 1.15% to $55.25.

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