The Federal Reserve said Wednesday that it would keep interest rates steady for now within a range of 5.25% to 5.5%, as analysts had expected. That means borrowing costs will remain elevated as inflation remains elevated above the Fed’s target goal of 2%.
But there was also good news for investors hoping that interest rates will start coming down soon. Fed chair Jerome Powell reaffirmed the central bank’s intent to cut interest rates by three-quarters of a percentage point by the end of the year. So now Wall Street will turn its forecasting to the Fed’s next meeting in June.
The possibility of interest rates still coming down in the not-too-distant future helped all three major stock market indexes end the day in the green. The Dow Jones Industrial Average gained 374 points, or 1%. The S&P 500 rose 0.8% to close at 5,220.08. And the Nasdaq $NDAQ was up 1.18% to end at 16,353.49
Chipotle wants investors to have more
The fast-casual restaurant chain Chipotle $CMG caught investors’ attention after announcing a 50-for-1 stock split. That sent Chipotle stock up 8% and across the $3,000 mark, before it closed the day up 3.5% at $2,895 per share.
Generac Holdings Inc., an energy technology solutions company, was among the top performers, closing up 4.4% on the day.
Even Boeing stock gains as airlines fly high
Airline stocks including United Airlines, American Airlines, and Southwest Airlines flew high, ending the day in green. American Airlines stock gained 4.2%, United Airlines stock was up 4.2%, Delta Air Lines soared 3.75%, and Southwest jumped 2.2%
JetBlue Airways, which said late Tuesday that it will eliminate several unprofitable routes as it looks to slash costs in the wake of its failed $3.8 billion merger with budget carrier Spirit Airlines, closed up 6.8%.
Airline stocks may have been lifted by UBS analysts’ prediction that the intense cost pressures in the industry will ease later this year and margins may move higher.
Even Boeing $BA, the troubled airplane manufacturer that entered the day as the very worst stock in the S&P 500 to start 2024, closed up 3.6%
Auto stocks ride the market wave
General Motors $GM and Ford $F scored a victory on Wednesday as the U.S. softened fuel economy rules for an EV transition. The Department of Energy has eased proposed rules that would have forced automakers to reduce production of gas-guzzling vehicles or face billions of dollars in fines.
GM stock closed up 3.2% and Ford stock closed up 4.9%
Nasdaq drops (the stock, not the index)
Nasdaq Inc.’s common stock dropped 2.5% after an announcement that minority shareholder Borse Dubai (a stock exchange in the United Arab Emirates) plans to sell a third of its shares in the exchange. After completing the deal, Borse Dubai is expected to become the second-largest shareholder in Nasdaq, with approximately 62.4 million shares, representing a stake of about 10.8%.