Stocks ended little changed Wednesday, giving back intraday gains, with better-than-expected results from blue-chip names, including Apple, offset by lingering concerns related to China’s coronavirus outbreak.
The Federal Reserve left its policy interest rate unchanged as expected and said the economy is growing at a moderate pace, but Fed Chairman Jerome Powell acknowledged that the coronavirus epidemic in China introduces “uncertainty” into the outlook and also called asset valuations “somewhat elevated.”
What did major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.92% rose 11.60 points, or 0.4%, to end at 28,734.45, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.46% slipped 2.84 points, or 0.1%, to 3,273.40. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.13% advanced 5.48 points, or 0.1%, to finish at 9,275.16.
The Dow on Tuesday rose 187.05 points, or 0.7%, to end at 28,722.85, snapping a five-day losing streak and taking back a chunk of the previous session’s decline, which was the steepest one-day fall since October. The S&P 500 which has also suffered its biggest one-day drop since October on Monday, rose 32.61 points, or 1%, to finish at 3,276.24. The Nasdaq Composite closed at 9,269.68, up 130.37 points, or 1.4%.
What drove the market?
Stocks struggled to recover more of the ground lost during Friday and Monday’s selloff sparked by fears a coronavirus epidemic in China would slow global economic growth. By Wednesday there were about 6,000 confirmed cases, and the death toll had risen to 132.
Investors in U.S. stocks were encouraged by a slew of corporate earnings reports led by Dow component Apple Inc . /zigman2/quotes/202934861/composite AAPL -0.28% which rose to a record high at $327.25 intraday, before closing up 2% at $324.34. The phone maker reported its second-best quarter for iPhone sales in the company’s history late Tuesday.
So far, nearly 25% of S&P 500 companies have reported results for the previous quarter. Of those companies, nearly 72% have beaten analyst expectations, FactSet data shows.
“The current view is that earnings will be up around 10% in 2020, but early-in-the-year estimates generally come down as the year wears on,” Byron Wien, vice chairman for private wealth solutions, at Blackstone, wrote in an annual outlook note.
“Geopolitical uncertainty and the twists in the outlook for the presidential election should create several market corrections of 5%, but none greater than 10%,” he added. “While the economic environment is not particularly strong, investors will become comfortable that the longer-term outlook remains favorable, albeit subdued,” he said.
The Federal Reserve held its benchmark fed funds interest rate steady in a range between 1.5% and 1.75%. on Wednesday, as expected, saying the economy remained on a moderate growth path.