Wall Street ends mixed as Fed holds rates and December hike expectations rise

US stocks finished Wednesday, October 28, with modest changes after the Federal Reserve left interest rates unchanged, as investors weighed the prospect of another increase in December against strong corporate earnings and renewed demand for semiconductor shares.

The S&P 500 and Dow Jones Industrial Average posted small gains, while the Nasdaq Composite slipped as technology stocks struggled to extend their recent rally.

Price overview

The Dow Jones Industrial Average rose 0.10% to 52,427.35 points, while the S&P 500 gained 0.05% to 7,726.82 points.

The Nasdaq Composite declined 0.13% to 26,444.17 points.

Federal Reserve keeps December hike in focus

The Fed maintained its benchmark interest rate at 3.75%–4.00%, with two policymakers dissenting in favor of an immediate quarter-point increase.

Chairman Kevin Warsh emphasized the central bank's readiness to act against persistent inflation.

Investors increased their expectations of a December rate increase, with futures markets pricing in an approximately 87% probability of a quarter-point hike, compared with 78% on Tuesday.

Chipmakers outperform

Micron Technology gained 4.7% after South Korean rival SK Hynix reported a more than sevenfold increase in quarterly profit.

AI infrastructure company Vertiv surged 16.8% following stronger-than-expected results and improved annual forecasts.

Meanwhile, Robinhood declined 3.9% after weaker cryptocurrency activity weighed on earnings.

Corporate earnings remain supportive

Approximately 84% of S&P 500 companies reporting third-quarter results have exceeded analysts' expectations.

Investors are now turning to quarterly earnings from Microsoft and Alphabet, particularly their spending plans for artificial intelligence infrastructure.

Market outlook

Thursday's US inflation and economic growth figures could reshape expectations for December's Fed meeting.

Strong inflation data could push Treasury yields higher and renew pressure on technology valuations, while encouraging economic figures may help sustain Wall Street's recovery.