Stocks Rise Despite Inflation and War Talk: Stock Market Today
The main equity indexes were up and down, along with volatile oil prices and bond yields, as the Fed acted as markets expected.
Stocks rallied after the Federal Open Market Committee (FOMC) announced a widely anticipated decision to hold its benchmark interest rate steady on Wednesday, even as markets priced in rising probability of more war in the Middle East. The main equity indexes were comforted by Fed Chair Kevin Warsh's explanation for the pause, as well as a new change to FOMC meetings moving forward, but still weakened late in the session.
According to The Wall Street Journal, the U.S. is telling allies in the Persian Gulf region "to be prepared for a short, intense military campaign" against Iran following next week's midterm elections.
"We did a little cease-fire, which I never liked very much," President Donald Trump said at a campaign rally in Corinth, Mississippi, on Monday. "I consider it sort of a waste of time. But, you know, you like to listen to professionals."
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The front-month West Texas Intermediate crude oil futures contract rose 2.7% to $102.56 per barrel, while Brent futures, the international benchmark, added 1.8% to $111.40.
Market-based interest rates were mixed, with the 2-year Treasury yield tracking back 3.1 basis points to 4.706%, but the 10-year (+3.3 bps, 5.024%) and 30-year (+4.6 bps, 5.351%) ticking higher for the day.
By the closing bell, the broad-based S&P 500 was up 0.3% at 7,743, the blue-chip Dow Jones Industrial Average had added 0.2% to 52,475, and the tech-heavy Nasdaq Composite was higher by 0.3% at 26,549.
Fed puts inflation fight on hold
The FOMC voted 10-2 to maintain the target range for the federal funds rate at 3.75% to 4.00%, noting as it did in September that the economy is strong, capex is robust and the unemployment rate is little changed.
At the same time, inflation remains elevated, as does uncertainty, "owing, in part, to geopolitical developments." The FOMC said waiting for more information will help it decide what to do about getting back to its 2% inflation target. "The Committee will deliver price stability," it repeated.
"It's our responsibility to get inflation down," Warsh said during his post-meeting press conference. "That's the reason the FOMC's discussion over the last couple of days focused mainly on the price stability side of our remit."
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The Fed chair added that he and the committee have "made clear our readiness to act as circumstances require, and we have shown our willingness to act."
Note that the main indexes turned positive across the board after Warsh said that the Fed will still have eight meetings in 2027. However, one of those meetings will not include a policy decision or statement; rather, it will be devoted to the central bank having richer conversations and strategic deliberations about monetary policy.
In 2028, two of the Fed's eight meetings will likely not have a policy decision or statement.
You can follow more news and updates about the October Fed meeting on our live blog.
Vertiv goes vertical, Alphabet and Microsoft take center stage
"Meanwhile," observes BlackRock Global Chief Investment and Portfolio Strategist Gargi Pal Chaudhuri, "strong corporate earnings continue to support our constructive outlook on equities, particularly AI, where demand remains robust."
Chaudhuri says earnings growth is broadening beyond tech stocks.
Indeed, Vertiv Holdings (VRT, +16.5%), basically an HVAC company that specializes in cooling down AI data centers, reported greater than 100% organic order growth for the third quarter, as the industrial stock beat Wall Street's revenue and earnings estimates, as well as analysts' Q4 forecasts.
"Results materially strengthen the execution thesis," Oppenheimer analyst Noah Kaye writes in a review of Vertiv's results, noting that management continues to expect to benefit from pricing power amid rising costs this year.
Kaye reiterated his Outperform (Buy) rating and his $325 12-month target price, with results also underscoring demand reacceleration.
Investors, traders and speculators will look for more signs of sustainability for that kind of demand trajectory as Alphabet (GOOGL, +1.3%) and Microsoft (MSFT, -0.06%) report results and share guidance after today's closing bell.
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