US stocks edge higher as Fed keeps rates unchanged and flags a possible December hike

what happened

Reuters reports that US equities mostly climbed on Wednesday after the Federal Reserve held its benchmark rate, a move analysts had largely anticipated. In its statement the central bank described the economy more favorably, while still calling inflation high. Chair Kevin Warsh told reporters at his press conference that policymakers are prepared to act if needed.

Ryan Detrick of Carson Group in Omaha called the decision unsurprising and expects pressure for one more hike in December because inflation still poses a risk. According to CME FedWatch, the probability of a quarter-point increase at the December meeting rose to 87.4% from 78.3% a day earlier. Thursday's PCE inflation report and the advance third-quarter GDP estimate could shift those expectations.

Earnings are also in focus. According to LSEG, 84% of the 200 S&P 500 companies that have reported beat consensus, and the index's third-quarter profit growth estimate has risen to 31.8%. Micron gained 4.7% after SK Hynix posted a sharp profit jump, while Robinhood fell 3.9% on weaker crypto trading.

why it matters

A rate hike would tighten financial conditions while corporate profits remain strong, so rate expectations and oil, which has traded above $100 a barrel since the Iran war began, matter for stocks and bonds.

market impact

US stocks: the Fed hold and strong earnings support indexes, while higher hike odds limit gains

• ▲US stocks pressure up — indexes mostly rose after the Fed hold and strong earnings reports

instruments