US close: Stocks lifted by Powell's steady hand, tariff talks

(Sharecast News) - Wall Street stocks finished higher on Wednesday as a calm and measured statement from Federal Reserve chair Jerome Powell eased fears, along with increased optimism regarding trade talks between the US and China.

Despite a temporary sell-off after the Fed decision, markets erased losses by the close as the Dow rose 0.7%, the S&P 500 gained 0.4% and the Nasdaq rose 0.3%.

Rate-setters in Washington D.C. stood pat on interest rates, as expected, while conceding the difficulty of pursuing its goals in the current climate. In its policy statement, the Federal Open Market Committee said that the economy was continuing to expand at a solid pace, notwithstanding swings in imports, and that the jobs market remained "solid" too.

In his post-meeting press conference, Powell said that whether or not interest rate cuts would be needed over the remainder of 2025 would depend on how the current disruptions to trade finally play out. Uncertainty about the future path of the economy was "extremely elevated", Powell said.

But right now "the economy is doing fine" and policy was "less restrictive and in a good place", he said, stressing the need to wait for more clarity on how the economic outlook evolves.

Bonds and the dollar benefitted from Powell's "steady hand", according to Stephen Innes, managing partner at SPI Asset Management, along with the latest tariff newsflow. The yield on a 10-year US Treasury was down 4 basis points at 4.274% while the dollar index was up 0.6% at 99.87.

"Powell didn't blink under the barrage of doomsday headlines-no recession confession, no panic-to-please-the-press soundbite. He sidestepped the tariff hysteria, pointed to resilient jobs data and cooling inflation, and effectively shut the door on any pre-Q3 rate cut. The panic button? Safely back in the drawer, at least for now," Innes said.

Helping sentiment on Wednesday were reports that treasury secretary Scott Bessent and trade representative Jamieson Greer will meet with their Chinese counterparts in Switzerland later this week.

However, as pointed out by analyst David Morrison from Trade Nation, "these are seen as preliminary talks to set the stage for more substantive discussions down the line, so investors took the news in their stride".

Elsewhere on the macro front, US mortgage applications shot up 11% in the week ended 2 May, according to the Mortgage Bankers Association of America, with applications to purchase a home shot up 11%, as did applications to refinance a mortgage.

Market movers

Nvidia was performing well on rumours that Trump may veto strict rules on AI chip shipments introduced by the Biden administration, which had been set to go into effect next week. The overhaul could pave the way for more AI chips to be sent to countries including India, Mexico and Israel.

Elsewhere in the tech space, shares in Super Micro Computer were lower after the group's Q3 earnings missed expectations on the Street, while Advanced Micro Devices traded higher on the back of better-than-expected Q1 earnings.

Ride-hailing giant Uber reported a stronger first quarter than last year, though shares dropped as numbers fell short of forecasts. Gross bookings and total revenues both improved by 14% year-on-year to $42.8bn and $11.5bn respectively, but analysts were widely expecting figures closer to $43bn and $11.6bn, respectively.