Impressive Earnings, Dovish Fed Carry Dow Over 25,000

The major U.S. stock indexes soared on Wednesday after the U.S. Federal Reserve kept its benchmark interest rate unchanged as widely expected, while saying it will be “patient” before raising rates in the future. After the Fed statement and Chairman Jerome Powell’s remarks, the futures markets continued to price in no further tightening while indicating a small chance for a rate cut over the next year.

In the cash market, the benchmark S&P 500 Index settled at 2681.05, up 41.05 +1.56%. The blue chip Dow Jones Industrial Average finished at 25014.86, up 434.90 or +1.77% and the tech-based NASDAQ Composite closed at 7183.08, up 154.79 or +2.20%.

Earnings Continue to Impress

Strong earnings also helped fuel the rally which helped drive the Dow to its first close over 25000 since December 4. The blue chip index was supported early in the session by better-than-expected earnings reports from Apple and Boeing.

Shares of Apple climbed 6.8 percent after reporting a quarterly profit that barely beat estimates late Tuesday. This good news carried over to Wednesday morning’s session. The Apple report said the company’s overall quarterly revenue topped expectations, but iPhone sales for the quarter came in below estimates. Investors liked the report after trashing the stock earlier in month after the company slashed its revenue guidance, citing a slowdown in China.

A 6.25 jump in Boeing shares also gave the Dow Jones Industrial Average an early boost. The stock rose after the company posted quarterly earnings that easily beat expectations. In its report, the aerospace giant posted strong annual revenue of more than $100 billion for the first time and gave strong earnings guidance for 2019.

After the bell on Wednesday, Facebook posted strong financial numbers for its fourth quarter, beating on earnings and revenue and sending shares up more than 12 percent in extended trading. This should help underpin the technology-driven NASDAQ Composite Index on Thursday.

Additionally, AMD shares also jumped nearly 20 percent after releasing earnings that match expectations. The chipmaker added it expects 2019 sales to grow in the “high single-digit percentage” range.

According to FactSet, so far 71 percent of the companies in the S&P 500 Index that have reported have surpassed earnings expectations.

Wednesday’s solid stock market rally on the back of strong earnings and the dovish U.S. Federal Reserve have erased the bearish news at the start of week from Nvidia and Caterpillar. Furthermore, it gives investors a cushion against the uncertainty heading into the high-level trade talks between the United States and China, and ahead of Friday’s potentially volatile U.S. Non-Farm Payrolls report.