U.S. equities and stock exchange traded funds inched higher after the Federal Reserve kept interest rates unchanged Wednesday, but pointed to a relatively upbeat U.S. economy that suggested the central bank could tighten its monetary policy later this year.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.1% higher Wednesday.
The technology sector led gains with Apple (NasdaqGS: AAPL) shares surging Wednesday after the tech giant reported strong demand for the iPhone 7 late Tuesday. Meanwhile, the PowerShares QQQ (NasdaqGM: QQQ), which tracks the tech heavy Nasdaq-100 Index and includes AAPL as its top weight, rose 0.8% Wednesday.
U.S. equities were mostly in the red in early Wednesday trading but bounced back into the positive mid-session after the Fed kept rates unchanged and saw a strengthening economic outlook.
“This ongoing gap between the market’s expectations and the future pace of rate increases shows that there is a kind of fragility in the U.S. markets,” Franck Dixmier, global head of fixed income at Allianz Global Investors, told the Wall Street Journal. “It is in the Fed’s interest to be more precise about the future pace of rate increases.”
The Fed said job gains remained solid, inflation increased and economic confidence rose, stating that “measures of consumer and business sentiment have improved of late” in a meeting in which it left benchmark interest rates in a range of 0.50% to 0.75%, Reuters reports.
The central bank also revealed unemployment is currently at 4.7%, or near a level many policymakers consider to be full employment, and said it expects inflation to rise to its 2% target in the medium term. The Commerce Department showed an uptick in inflation to 1.7% on Monday.
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