WALL Street stocks tread water while the dollar dipped yesterday after the Federal Reserve lifted interest rates and signalled the possibility of further increases.

The Fed as anticipated raised its benchmark lending rate to a range between 5.25% and 5.5%, with chair Jerome Powell saying during a press conference the central bank would let data determine whether to hike again.

Briefing.com analyst Patrick O’Hare said Powell’s comments met the market’s expectations, noting that at the end of the press conference, stocks had essentially reverted to their position from before the 6pm announcement.

“It was a very non-committal kind of presentation, which is good enough for the market,” he said.

The Dow edged higher, while both the S&P 500 and Nasdaq retreated slightly.

The dollar edged down after the Fed’s statement in a move described as “mostly steady” by Convera’s Joe Manimbo.

“Today’s Fed decision showed the central bank maintaining maximum optionality as it decides whether higher rates may be warranted to tame inflation,” Manimbo said.

Earlier, major stock markets mostly retreated in anticipation of the Fed’s move.

Equities had been boosted Tuesday by Beijing’s pledges of stimulus after a string of readings showed the post-Covid economic recovery was going off the rails in China.

After the Fed, attention turns to the European Central Bank, which announces its own rate decision today, followed by the Bank of Japan tomorrow.

The Paris stock market fared worse than London and Frankfurt yesterday, shedding 1.4%.

It was dragged down by luxury group LVMH, whose shares dropped 5%.

“LVMH reported first half results after the European close (Tuesday), and highlighted a weakening trend in US sales,” noted Steve Clayton, head of equity funds at Hargreaves Lansdown.

On the upside, shares in Rolls-Royce, the British maker of aircraft engines and other power systems, soared more than 20% as a turnaround plan under new leadership delivered far better-than-expected results.

Among US companies that gained after results were Boeing, whose shares rose 8.7%, Google parent Alphabet, which was up 5.6% and Coca-Cola, which advanced 1.3%.

Companies that fell included Microsoft, whose shares dropped 3.8% and Texas Instruments, which slipped 5.4%. 

O’Hare said US companies, on average, are reporting slightly below expectations in terms of financial results. But executives’ commentary about the economy have been better than feared.

“They’re acknowledging there’s some slowing, but consumers are hanging in there,” O’Hare said.

Key figures around 8.40pm:

New York - Dow: UP 0.2% at 35,520.12 (close)

New York - S&P 500: DOWN less than 0.1% at 4,566.75 (close)

New York - Nasdaq: DOWN 0.1% at 14,127.28 (close)

London - FTSE 100: DOWN 0.2% at 7,676.89 (close) 

Frankfurt - DAX: DOWN 0.5% at 16,131.46 (close)

Paris - CAC 40: DOWN 1.4% at 7,315.07 (close)

EURO STOXX 50: DOWN 1.0% at 4,346.15 (close)

Tokyo - Nikkei 225: FLAT at 32,668.34 (close)

Hong Kong - Hang Seng Index: DOWN 0.4% at 19,365.14 (close)

Shanghai - Composite: DOWN 0.3% at 3,223.03 (close)

Euro/dollar: UP at US$1.1089 from US$1.1055 on Tuesday

Pound/dollar: UP at US$1.2943 from US$1.2902 

Euro/pound: DOWN at 85.65 pence from 85.69 pence

Dollar/yen: DOWN at ¥140.34 from ¥140.90 

West Texas Intermediate: DOWN 1.1% at US$78.78 per barrel

Brent North Sea crude: DOWN 0.9% at US$82.92 per barrel. – AFP, July 27, 2023.