The S&P 500 reached a new all-time closing high for the second consecutive day on Wednesday, as investors analyzed the Federal Reserve’s January meeting minutes and President Trump’s proposed tariffs. All three major U.S. stock indexes closed in positive territory.
The Federal Reserve maintained its benchmark interest rate during its January meeting. The released minutes revealed policymakers’ concerns regarding persistent inflation and the potential impact of Trump’s policy proposals, especially tariffs, on their inflation-control efforts.
“The minutes indicated some discussion about a potential economic slowdown,” noted Paul Nolte, Senior Wealth Adviser and Market Strategist at Murphy & Sylvest. “This might be leading investors to believe that a Fed rate cut is still possible.”
However, Nolte added, “The Fed is unlikely to take action until there’s more clarity on the tariffs, maintaining a ‘wait and see’ approach.”
President Trump’s Tuesday announcement of potential 25% tariffs on automobiles, semiconductors, and pharmaceuticals added to existing anxieties surrounding a potential global trade war.
“The prevailing sentiment seems to be that these tariffs are more of a bargaining tactic, with less actual impact than initially feared,” Nolte observed.
Meanwhile, the Commerce Department reported a 9.8% decline in January housing starts, attributed to weakened demand, higher mortgage rates, and severe winter weather. Consequently, housing stocks underperformed, falling 1.5%.
The Dow Jones Industrial Average increased by 71.25 points (0.16%) to 44,627.59. The S&P 500 rose 14.57 points (0.24%) to 6,144.15, while the Nasdaq Composite saw a marginal gain of 14.99 points (0.07%) to 20,056.25.
Healthcare led the S&P 500 sectors with the highest percentage gain, whereas materials and financials lagged.
As the fourth-quarter earnings season nears its end, LSEG data shows that 74% of S&P 500 companies have exceeded earnings expectations. Analysts now project a 15.3% year-on-year earnings growth for the S&P 500 in Q4, significantly higher than the initial 9.6% estimate.
Electric truck manufacturer Nikola Corporation filed for Chapter 11 bankruptcy protection, resulting in a 39.1% drop in its stock price. Specialty chemicals company Celanese plummeted 21.5% after reporting a quarterly loss.
Shift4 Payments saw a 17.5% decline in its shares following its Q4 results and the announcement of a $2.5 billion acquisition of Global Blue. Conversely, Global Blue’s shares surged 17.5%.
Analog Devices outperformed expectations with its quarterly earnings and revenue, leading to a 9.7% increase in its stock price.
Declining stocks slightly outnumbered advancing stocks on the NYSE with a ratio of 1.1-to-1. The Nasdaq saw a higher ratio of declining to advancing stocks at 1.22-to-1.
Trading volume on U.S. exchanges reached 16.36 billion shares, surpassing the 20-day average of 15.57 billion. The S&P 500 achieved 28 new 52-week highs and seven new lows, while the Nasdaq recorded 96 new highs and 119 new lows. The market’s positive performance reflects cautious optimism amidst ongoing economic and policy developments.
