Wall Street Closes Higher After Fed's Unanimous Decision

After the rise of the Chinese stock market, the main European stock markets opened on Wednesday with moderate increases. Confidence has invaded the market by promises of Chinese regulators to buy shares to stabilize the stock if necessary and suggestions for further monetary easing by the central bank. Meanwhile, Wall Street opened the day higher, as investors were waiting the news of the statement from the Federal Reserve.

Fed Decision was Unanimous. Members of the Fed voted unanimously to keep interest rates unchanged.

The overnight federal funds rates are at a record low of 0 to 0.25% since December 2008, the last the financial crisis.

However, analysts are more optimistic about the economy, so September could be the date for the beginning of normalization.Today's statement was almost unchanged from the previous meeting and analysts perceive the improvement in the labor market as a signal that September is the appropriate date. “The labor market continued to improve, with solid job gains and declining unemployment,” the Federal Open Market Committee said.

The minutes of the meeting will be published on 19 August and the next meeting is scheduled for 16 and 17 September. Although the Fed does not give any date for increasing interest rates, the U.S. economy is offering a positive economic assessment and Mr. Market should wait until at least September to know if the hike takes place before the end of the year.

Treasury yields remained higher after the Fed announcement and stocks extended earlier gains while the U.S. dollar strengthened against its main rivals. At the close of the trading day, the Dow Jones is up 0.75%, the S&P 500 advances 0.72% and the Nasdaq gains 0.50%.

Facebook Beats by $0.03.  Facebook (FB) reported stronger than expected second-quarter profits and sales after the bell, but it seems that investors are not impressed and the company's shares fell in after-hours trading by more than 2%. The giant reported second quarter EPS of $0.50, beating Wall Street analysts' expectations of $0.47, and up 16% when compared to the same quarter a year ago. Further, sales increased by 39% to $4.04 billion which exceeded estimates of $3.98 billion.

Other Company that Tumbles. Whole Foods Market (WFM) is plummeting more than 11%, in after-hours trading after reporting EPS of $0.43 on revenue of $3.632 billion, missing analyst's estimates.

Thursday Movers. Companies such as ConocoPhillips (COP), Ensco (ESV), Invesco (IVZ), LinkedIn (LNKD), Occidental Petroleum (OXY) and Procter & Gamble (PG) among others will report its quarterly results tomorrow. Investors should keep an eye on these companies in Thursday's trading session.

Published on Jul 19, 2015
By Omar Venerio
Capital Markets, Derivatives and Financial Management Professor, Master in Finance and CFA candidate. I am an independent trader of stocks and options and passionate about the stock market.

Copyrighted 2020. Content published with author's permission.

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