Wall Street notched new records with modest gains on Wednesday, July 26, after the Federal Reserve tiptoed the line between hawk and dove.
The S&P 500 added 0.03% to 2,477, the Dow Jones Industrial Average was up 0.45% to 21,711, and the Nasdaq climbed 0.16% to 6,422. The S&P 500 and Nasdaq were at records for their second day in a row.
Following its July meeting, the Fed said it would implement changes to its balance sheet "relatively soon" provided the economy expands as expected. Previous language in the Fed's statement had said those changes would come this year.
The Fed currently holds $4.5 trillion in Treasurys and mortgage-related bonds on its balance sheet. Unloading those would likely tighten monetary conditions in the same way an interest rate hike would. The Fed has previously emphasized that when it plans to do so it will be a gradual process.
"We do have some concern about that causing some volatility and it's such unprecedented territory I'm not sure if anybody honestly knows what it's going to do," Mike Piershale, president of Piershale Financial Group, said of the unwinding process.
The Fed left the federal funds rate at 1% to 1.25%, as widely expected. Another rate hike is not expected until at least December. Even then, chances of a year-end increase are only at 42.9%, according to CME Group fed funds futures.
Dow component Boeing Co. (BA) - Get Boeing Company Report rose 9% following an earnings beat. The plane manufacturer swung to a profit of $2.89 a share from a loss of 37 cents in the year-ago quarter. Adjusted profit of $2.55 a share came in higher than $2.30 consensus. Revenue slid 8.1% to $22.74 billion and missed estimates of $23.02 billion.
Advanced Micro Devices Inc. (AMD) - Get Advanced Micro Devices, Inc. Report jumped nearly 5% Wednesday as cryptocurrency use increased demand for its graphics chips. Second-quarter revenue rose 19% to $1.22 billion, beating estimates of $1.16 billion. Adjusted earnings of 2 cents a share exceeded estimates of a flat reading. Computing and graphics revenue increased 51% from a year earlier.
Other tech stocks on the rise included Amazon.com Inc. (AMZN) - Get Amazon.com, Inc. Report , Nvidia Corp. (NVDA) - Get NVIDIA Corporation Report , Alibaba Group Holding Ltd. (BABA) - Get Alibaba Group Holding Ltd. Report , Broadcom Ltd. (AVGO) - Get Broadcom Inc. Report , and Texas Instruments Inc. (TXN) - Get Texas Instruments Incorporated Report . Amazon hit an all-time high.
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Ford Motor Co. (F) - Get Ford Motor Company Report easily beat Wall Street earnings estimates, posting second-quarter adjusted profit of 56 cents a share compared to estimates of 43 cents. The report from the No. 2 U.S. automaker was the first under new CEO Jim Hackett, who replaced former CEO Mark Fields in May. Revenue in the quarter was $39.85 billion; analysts expected $37.28 billion. The stock fell 2%.
Whole Foods Market Inc. (WFM) surprised markets by releasing third-quarter earnings hours before scheduled. The supermarket chain earned an adjusted 36 cents a share, 3 cents above expectations. Revenue of $3.73 billion met estimates. Same-store sales declined by 1.9%, a shallower drop than an expected 2.2% fall. Whole Foods was scheduled to report earnings after the bell.
Chipotle Mexican Grill Inc. (CMG) - Get Chipotle Mexican Grill, Inc. Report moved 2% lower even after the burrito chain posted second-quarter earnings ahead of forecasts. Profit in the quarter was $2.32 a share; analysts had expected Chipotle to report $2.18. Revenue in the quarter rose 17.1% to $1.17 billion and same-store sales rose 8.1%. Revenue came in shy of analysts' estimates of $1.19 billion.
During the company's conference call, Chipotle CEO Steve Ells touched on food safety which first plagued the company in 2015, and more recently caused a closure at a Virginia location. Ells detailed several steps and procedures in conjunction with a plan to strengthen the company's commitment to developing one of the "most advanced" foods safety systems.Regarding the Norovirus specifically, Ells said that the outbreak last week wasn't related to the company's food supply and that he is disappointed that Chipotle failed in preventing it from spreading.
Coca-Cola Co. (KO) - Get Coca-Cola Company Report reported a better-than-expected quarter. The beverage company earned an adjusted 59 cents a share, 2 cents higher than estimates. Revenue of $9.7 billion was down from $11.5 billion a year earlier but was in-line with expectations. A decline in revenue was tied to currency headwinds.
Before Wednesday's market open, the beverage giant reported second-quarter earnings of 59 cents a share on revenue of $9.7 billion, compared to Wall Street's estimates for earnings of 57 cents a share on revenue of $9.7 billion. Coca-Cola rose 1%.
AT&T Inc. (T) - Get AT&T Inc. Report increased 5% after exceeding second-quarter earnings estimates. The telecom added 127,000 new wireless postpaid subscribers over its recent three-month period, far higher than analysts' expectations for growth of 20,500. Earnings of 79 cents a share topped estimates by a nickel. Revenue of $39.8 billion was in-line with forecasts.
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United States Steel Corp. (X) - Get United States Steel Corporation Report surged 7% on a second-quarter earnings beat and solid guidance for the full year. The steel company earned $1.48 a share, far higher than estimates of 36 cents. Revenue of $3.14 billion exceeded consensus of $2.98 billion. For the full year, U.S. Steel anticipates earnings of $1.70 a share, above estimates of 84 cents.
Crude oil prices rose on Wednesday after another decline in weekly domestic inventories. U.S. crude stockpiles dropped by 7.2 million barrels in the week ended July 21, according to the Energy Information Administration. The decline was far sharper than an expected drop of 2.5 million barrels.
West Texas Intermediate crude oil was up 1.8% to $48.72 a barrel on Wednesday.
Energy stocks led gains on Wall Street. Industry leaders including Exxon Mobil Corp. (XOM) - Get Exxon Mobil Corporation Report , Chevron Corp. (CVX) - Get Chevron Corporation Report , Halliburton (HAL) - Get Halliburton Company Report and Schlumberger Ltd. (SLB) - Get Schlumberger NV Report were higher. The Energy Select Sector SPDR ETF (XLE) - Get Energy Select Sector SPDR Fund Report added 0.11%.
New home sales rose at a slightly slower pace than anticipated in June. The Census Bureau reported a 0.8% month-on-month increase in sales of new single-family houses in June, reaching a seasonally adjusted annual rate of 610,000. That was slightly below an expected increase to 615,000. Sales increased for a second straight month.
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