Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 27, 2016.BRENDAN MCDERMID/Reuters
U.S. stocks closed mixed Wednesday after U.S. Federal Reserve policy makers said near-term risk to the economic outlook have diminished even as they left interest rates unchanged.
The S&P 500 Index closed down 2.6 points, or 0.12 per cent, at 2,166.58 in New York. The gauge is about 0.6 per cent below an all-time high reached on Friday after rallying 8 per cent in the past month. Prior to the Fed statement, earnings set the tone in Wednesday's session, as a rally in Apple Inc. was offset by earnings-fuelled declines in companies from Coca-Cola Co. to Twitter Inc.
The Dow Jones industrial average slipped 1.58 points, or 0.01 per cent, at 18,472.17 and the Nasdaq added 29.76 points, or 0.58 per cent, to 5,139.81.
In Canada, stocks slipped as energy producers declined after crude prices slumped to the lowest level in three months.
The S&P/TSX composite index fell 3.46 points, or 0.02 per cent to 14,546.54. The benchmark is up about 11 per cent in 2016, making Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 22.3 for the S&P/TSX, about 10 per cent higher than the S&P 500 Index.
The Canadian dollar rose 0.05 to 75.83 cents (U.S.).
Suncor Energy Inc. and Cenovus Energy Inc. retreated at least 1 per cent to lead energy producers lower as five of 10 industries in the S&P/TSX retreated. Bank of Montreal and Royal Bank of Canada each fell more than 1 per cent as financial services companies also declined.
Crude for September delivery dropped as much as 2.6 per cent in New York, touching $41.84 (U.S.) a barrel. Inventories rose 1.67 million barrels, according to the Energy Information Administration, while analysts had forecast a 2 million barrel decline. Oil has slipped more than 15 per cent since early June.
Barrick Gold Corp. and Goldcorp Inc. added more than 3 per cent. Raw-materials producers rose 0.4 per cent as a group, paring an earlier advance of as much as 1.8 per cent. Gold prices rose 1 per cent in New York. Gold tends to be a more attractive investment as a store of value against a weaker U.S. dollar in a low-rate environment.
The gain in mining stocks extends a rally for the group this year to 57 per cent, the best year-to-date performance for the group in at least 30 years, according to data compiled by Bloomberg.
Mining and energy stocks have propelled Canada to the second-best performance among developed markets, trailing only New Zealand. The S&P/TSX has joined global markets extending gains this month following a brief post-Brexit vote swoon amid a stretch of solid U.S. economic data and improving earnings.
In the U.S., job gains were "strong" in June and indicators "point to some increase in labor utilization in recent months," the Federal Open Market Committee said in a statement Wednesday after a two-day meeting in Washington. The Fed repeated language from June that they continue to "closely monitor" inflation and global developments, still emphasizing a gradual pace of rate increases.
"Not much has changed, though there's some option for them to raise rates in September," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, which manages $89-billion in assets. "That's why the market's not reacting much. We all have to get used to the fact that every one of these meetings is going to be something different."
Fed fund futures show even odds the Fed will raise rates at its December meeting, up from 48 per cent before the statement.
The main U.S. equity gauge surged with global equities on speculation the Fed won't rush to add stimulus even as the economy shows signs of picking up steam. After recovering its losses following the U.K.'s vote to leave the European Union, the S&P 500 went on to post seven records in 10 days.
Optimism that corporate earnings would help support gains has boosted the gauge by 19 per cent from a February low. Analysts have tempered their estimates for second-quarter profit declines to 4.5 per cent and are forecasting a rebound starting in the current period. The S&P 500 is now up 6.1 per cent for the year, one of the biggest winners among developed-market benchmarks.
Before the Fed's statement, traders priced in little chance of a rate increase today. Uneven data and the possible fall out from Brexit have held down expectations for higher borrowing costs this year. December is the first month for which traders projected an at least even chance of a rate increase.
Apple jumped the most in a year after posting a smaller-than-expected revenue decline as its cheaper iPhone model gained more traction. Boeing Co. rose after reporting a narrower loss than analysts projected. Twitter sank after its third-quarter sales fell well short of predictions. Coca-Cola dropped the most since April after sales trailed estimates.
Also moving on corporate earnings, Garmin Ltd. climbed 12 per cent, trading near its highest price in over a year. The company beat analyst estimates while raising it's year-end forecast. McDonald's Corp. fell 1.6 per cent, heading for its worst two-day drop since August after a disappointing earnings report on Tuesday.
Bloomberg