Stocks Jump After Fed Indicates Patience on Rate Increases

Stocks marched broadly higher Wednesday afternoon after the Federal Reserve signaled it could hold off on interest rate increases in the coming months, citing muted inflation.

The midafternoon announcement added to an early rally as traders welcomed positive results and outlooks from several big companies including Boeing, setting the market on pace to break a two-day losing streak.

Boeing soared after blowing away analysts’ forecasts for earnings and as its annual revenue topped $100 billion for the first time. The gain in the aerospace giant’s stock accounted for about a third of the 420-point gain in the Dow Jones Industrial Average.

Technology stocks accounted for much of the rally. Apple gained ground after investors brushed off a slide in iPhone sales. Health insurer Anthem rose on an upbeat outlook for the year.

Meanwhile, trade talks that opened Wednesday between the U.S. and China will loom over the market for the remainder of the week. The high-level talks are aimed at settling a monthlong trade war that has raised fears of slower economic growth. Industrial and technology companies have warned about slowing sales because of the trade impasse.

KEEPING SCORE: The S&P 500 index rose 38 points, or 1.5 percent, to 2,678 as of 2:33 p.m. Eastern time. The Dow Jones Industrial Average gained 425 points, or 1.7 percent, to 25,007. The Nasdaq composite climbed 138 points, or 2 percent, to 7,166.

FED MEETING: The central bank said Wednesday it plans to be “patient” about future rate hikes in light of “global economic and financial developments and muted inflation pressures.” Its benchmark short-term rate will remain in a range of 2.25 percent to 2.5 percent after having been raised four times last year. The Fed also said it is prepared to slow the reduction of its bond holdings if needed to support the economy. That would put downward pressure on long-term interest rates such as mortgages.

That announcement is good news for Wall Street, which has been worried that a faster pace of rate hikes would dampen U.S. economic growth, hurting corporate profits.

APPLE: The technology giant rose 6.7 percent to $164.97 after its latest results met Wall Street’s diminished expectations. The company jolted the market when it warned earlier this month that it would miss its own revenue projections for the first time in 15 years. A 15 percent drop in iPhone sales dragged down revenue and profit and the company gave a soft outlook for the latest quarter.

FLYING HIGH: Boeing surged 6.2 percent to $387.57 after the company delivered more planes and racked up a significant amount of government contracts during the fourth quarter. Revenue surged 14 percent as the company delivered more commercial and military planes. Profit and revenue topped expectations.

HEALTHY OUTLOOK: Anthem, the nation’s second-largest health insurer, soared 9.8 percent to $299.40 on an upbeat forecast for 2019. It said adjusted earnings in the new year are expected to be better than $19 per share, or about 8 percent higher than Wall Street had been expecting.

The company is working to boost its prescription benefits business, IngenioRx, which Anthem is running with help from CVS Health Corp. Anthem runs Blue Cross Blue Shield plans in several states, including big markets like California, New York and Ohio. It covers nearly 40 million people.

CHINA–U.S. TRADE: American and Chinese officials will begin two days of trade talks in Washington. President Donald Trump will reportedly meet Chinese Vice Premier Liu He in an attempt to move negotiations forward. But the Justice Department’s charges against Chinese tech giant Huawei, its subsidiaries and a top company executive may be a hurdle. China has urged U.S. authorities to end what it called an “unreasonable crackdown” against Huawei, which has been accused of stealing technology and violating sanctions on Iran.

GROWTH FEARS: The clouds of slower economic growth darkened over Europe, as the continent’s largest economy cut its forecast for 2019.

Germany now expects 1 percent growth instead of 1.8 percent growth. It posted 1.5 percent growth in 2018 and 2.2 percent growth in 2017. It cited trade issues and Britain’s so-far tumultuous exit from the European Union as key reasons for the cut forecast.

OVERSEAS: France’s CAC 40 rose 0.7 percent. Britain’s FTSE 100 rose 1.3 percent. Germany’s DAX fell 0.2 percent. Japan’s Nikkei 225 index fell 0.5 percent. South Korea’s Kospi rose 1 percent. Hong Kong’s Hang Seng index rose 0.4 percent.