Stocks Edge Higher Ahead Of Federal Reserve Decision, Bonds Surge After Softer Treasury Refunding Plan: What's Driving Markets Wednesday?

Stocks experienced a modest surge amid the Federal Open Market Committee meeting Wednesday. The central bank is widely expected to leave interest rates unchanged.

Investors appear to be betting on a dovish press conference from Jerome Powell, as they have largely been buying Treasury bonds in anticipation of no further rate increases and lower refunding needs for the Treasury.

The policy-sensitive two-year Treasury yield fell by 7 basis points to 5.02%, while the 30-year yield declined by 11 basis points. The iShares 20+ Year Treasury Bond ETF TLT rallied by 1.2%.

In its upcoming quarterly refunding auctions next week, the U.S. Treasury seeks to offer $112 billion in longer-term securities, representing a more restrained pace compared to earlier projections.

The day also witnessed softer-than-expected economic data, with the ISM Manufacturing Purchasing Managers’ Index dropping to 46.7 in October from the previous month’s 49, falling below the anticipated level of 49.

Additionally, the ADP reported the monthly national employment change was 113,000, which was lower than the expected figure of 150,000. Surprisingly, job openings increased for the second consecutive month in September, highlighting the enduring robustness of labor market.

Cues From Wednesday's Trading

The S&P 500 edged 0.3% higher, while tech stocks in the Nasdaq 100 rose 0.6%. The Dow Jones Industrial Average held steady for the day, while small caps eased 0.5%.

US Index Performance On Wednesday

Wednesday Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.4% higher to $419.80.
• The SPDR Dow Jones Industrial Average ETF DIA edged up 0.1% to $330.82.
• The Invesco QQQ Trust QQQ rose 0.7% to $353, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Technology Select Sector SPDR Fund XLK outperformed, rallying 0.9%.
• The Materials Select Sector SPDR Fund XLB was the laggard, down 0.9%.

See also: Futures Vs. Options

Stocks In Focus

• Advanced Micro Devices Inc. AMD rose 8% in response to positive earnings.
• WeWork Inc. WE plunged over 50% on reports of imminent bankruptcy filing by the company.
• The Kraft Heinz Co. KHC rose 3.2% in response to earnings.
• Paycom Software, Inc. PAYC slumped about 37% following its quarterly results.
• Other companies reacting to their quarterly results include Bausch + Lomb Corporation BLCO (up about 4%), Brinker International, Inc. EAT (up about 0.5%), CVS Health Corporation CVS (down about 2%), DuPont de Nemours, Inc. DD (down about 8%), GlaxoSmithKline plc GSK (down about 3.5%), Humana, Inc. HUM (down about 4.4%), Norwegian Cruise Line Holdings Ltd. NCLH (down about 3%) and SunPower Corporation SPWR (down about 9%).
• Companies reporting after the close are Avis Budget Group, Inc. CAR, Exact Sciences Corporation EXAS, Electronic Arts Inc. EA, The Clorox Company CLX, Etsy, Inc. ETSY, Marathon Oil Corporation MRO, MicroStrategy Incorporated MSTR, PayPal Holdings, Inc. PYPL, Qualcomm, Inc. QCOM, Qorvo, Inc. QRVO and Roku, Inc. ROKU.

Commodities, Bonds, Other Global Equity Markets

Crude oil rose 0.5%, with a barrel of WTI-grade crude trading at $81.51. The United States Oil Fund ETF USO was 0.6% higher to $75.49.  

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.4% lower to 1.0532.

European equity indices ended with marginal gains. The SPDR DJ Euro STOXX 50 ETF  FEZ edged 0.1% higher.

Gold eased 0.3% up to $1,978/oz, while silver fell 0.9% to $22.64. Bitcoin BTC/USD was 0.5% lower to $34,470.

Staff writer Piero Cingari updated this report midday Wednesday. 

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