NEW YORK (Reuters) – Dollar worn out and shares rose on Wednesday with Boeing and Apple's results and prolonged after the Federal Reserve had committed itself to being patient with future interest rate hikes, a change in tone as actors interpreted as a purchase signal.
FILE PHOTO: Traders works on the floor of the New York Stock Exchange (NYSE) in New York, USA on January 29, 2019. REUTERS / Brendan McDermid
Fed, in his policy statement at the end of a two-day meeting, the language of its December policy statement struck that further interest rate hikes would be appropriate in 2019. That language had roiled the markets with signs of slower global growth.
U.S. Stocks of extended gains and bond yields fell as markets got what they had hoped for, said Mohamed El-Erian, CFO of Allianz in Newport Beach, California. "This marks a full 180 from what the Fed signaled a few months ago," he said.
Scott Minerd, Global Investment Manager at Guggenheim Partners in Santa Monica, California, said Fed's break will further expand economic expansion, allowing it to continue building and increasing the risk of financial instability.
"The Fed refilled the punch bowl and the party continues. Buy risk assets," Minerd said.
Fed's political statement shows that the US central bank will remain unclear, which is very supportive of risk surcharges, at least in the short term, says Putri Pascualy, CEO of PAAMCO in Irvine, California.
"The reason for slowing global economic growth is 800 trillion gorilla in space," Pascualy said.
The MSCI World Equity Index, which tracks stock performance in 47 countries, rose 1.2 percent after gains in Asia overnight. The FTSEurofirst 300 index for leading European equities closed 0.41 percent.
Dow Jones Industrial Average rose 434.9 points or 1.77 percent to 25,014.86. S & P 500 achieved 41.05 points or 1.55 percent to 2,681.05, and the Nasdaq Composite added 154.79 points or 2.2 percent to 7,183.08.
Outstanding results from Boeing and Apple late Tuesday gave investors early relief.
Boeing's shares rose 6.25 percent after the world's largest planner boosted its profits and cash flow expectations in 2019 in the midst of a travel flight. Boeing also indicated that it had overcome supplier delays that caused 737 production last year.
Apple's results provided some reassurance as the iPhone manufacturer reported a sharp increase in service service. Its shares rose 6.83 percent
Oil prices rose, mating gains of more than 1 percent, as the potential for supply disruptions following US sanctions against Venezuela's oil industry raised prices.
Stocks listed in London jumped more than 1 percent after British legislators late Tuesday rejected a proposal by the Parliament aimed at preventing a potentially chaotic "no-deal" Brexit, a voice that initially pushed sterling sharply.
The exporter-heavy FTSE 100 in London rose 1.45 percent, as its components are often increased by a weaker pound because its multinational companies make up a large part of their foreign income in foreign currency.
Sterling rose 0.04 percent to $ 1.3071 after sliding about 0.7 percent against the dollar and the euro after parliamentary votes on Brexit.
"The poll does not fundamentally change how the market is talking about Brexit," says Detal Mehta, legal and general investment management, senior European economist.
Payroll's processor ADP reported that the US private sector added 213,000 jobs in January, beating forecasts for gains of 178,000. But the monthly total was lower than the 271,000 jobs added in December.
Dollar rate fell 0.39 percent to 95.447. Against the yen, the dollar fell 0.33 percent to 109.02.
The euro rose 0.39 percent to $ 1.1475.
Benchmark 10-year US government bonds rose 6/32 in price to push yields down to 2,600 percent.
U.S. West Texas Intermediate Raw Futures got 92 cents to settle at $ 54.23, while International Brent Raw Futures rose 33 cents to settle at $ 61.65 per barrel.
Reporting of Herbert Lash; Further reporting by Jennifer Ablan; Editing by Will Dunham and Leslie Adler