TODAY'S PAPER
Scattered Clouds 41° Good Evening
Scattered Clouds 41° Good Evening
Business

Stocks jump after Fed leaves interest rates unchanged

American flags fly at the New York Stock

American flags fly at the New York Stock Exchange on Wall Street on July 6, 2015. Photo Credit: AP

U.S. stocks are climbing Wednesday as investors were relieved that the Federal Reserve once again left interest rates unchanged. That’s sending dividend-paying stocks higher. Energy companies are rising with the price of oil.

KEEPING SCORE: The Dow Jones industrial average added 62 points, or 0.4 percent, to 18,192 as of 2:20 p.m. Wednesday on Wall Street. The Standard & Poor’s 500 index picked up 9 points, or 0.4 percent, to 2,148. The Nasdaq composite rose 19 points, or 0.4 percent, to 5,261.

The Dow was up about 30 points before the Fed’s decision was announced. Utilities and phone companies, which pay big dividends and are more attractive investments when interest rates are low, made substantial gains. Banks, whose profits suffer when interest rates remain low, fell.

WHAT THE FED SAID: The Federal Reserve said the economy has gotten a bit stronger after some shaky results in the spring, but it left its key interest rate unchanged. The central bank said the argument for raising rates has “strengthened.” The Fed raised interest rates in December, but hasn’t made another move since. That interest rate was cut to zero in late 2008 and at its current pace it will take many years for rates to get back to their pre-financial crisis levels.

Stocks wobbled over the last few weeks as investors wondered if the Fed would raise rates this month. In the end, three of the 10 decision makers supported raising rates now. Investors doubt the Fed will take action in November, when it meets right before the presidential election, but they think there’s a good chance rates will rise in December.

ENERGY: Oil prices jumped as fuel stockpiles shrank and investors hoped that supply gluts are easing, which would allow prices to rise. The Energy Information Administration said oil inventories dropped by 6.2 million barrels and gasoline inventories decreased by 2.5 million barrels last week.

S&P Global Platts says analysts expected oil inventories to grow and gasoline stockpiles to shrink by a smaller amount.

Benchmark U.S. crude added $1.41, or 3.2 percent, to $45.46 a barrel in New York. Brent crude, used to price international oils, rose $1.17, or 2.6 percent, to $47.05 a barrel in London. That helped energy companies, and Anadarko Petroleum rose $2.68, or 4.6 percent, to $60.98 while Chevron added $1.51, or 1.5 percent, to $99.21.

BONDS: Bond prices changed course and moved higher. The yield on the 10-year Treasury note fell to 1.67 percent from 1.69 percent.

ADOBE JUMPS: Software maker Adobe Systems climbed after it raised its forecasts for the year. Adobe also reported solid third-quarter results. Its stock climbed $6.45, or 6.4 percent, to $107.07.

CHECKS IN THE MAIL: FedEx boosted its forecasts for the year as it projected a record holiday season, and the shipping company posted better first-quarter results than analysts had expected. The stock rose $10.29, or 6.3 percent, to $172.94.

QUEASY FEELING: Biotech drug companies traded lower as Heather Bresch, the CEO of drugmaker Mylan, addresses Congress about the rising price of Mylan’s emergency allergy shot EpiPen. In prepared testimony, Bresch defended the company’s tactics and said Mylan balanced the price of EpiPen against access for patients.

Mylan edged up 36 cents to $41.62 Wednesday, but it’s down 14 percent since Aug. 19. The price of a two-pack of EpiPens has jumped more than 500 percent over the last decade to more than $600, and Mylan is getting ready to start selling a version that costs about half as much.

Drug companies, especially ones that make costly biotech products, have been hammered over the last year by repeated controversies over drug prices. Amgen lost 46 cents to $172.92 while Alexion Pharmaceuticals gave up $2.10, or 1.6 percent, to $129.63.

Drugstore operators Walgreens and CVS also slipped, which hurt consumer goods companies.

BANK OF JAPAN: Japan’s central bank made some technical changes that give it more influence over long-term interest rates. It said it will continue trying to stimulate the Japanese economy until inflation is higher than 2 percent a year, but it didn’t reduce interest rates any further. Some analysts thought the central bank would take further steps to bolster economic growth. Those steps could have weakened the yen. Since they weren’t, the dollar fell to 100.46 yen from 101.84 yen.

FLAT TIRE: CarMax lost $1.32, or 2.4 percent, to $54.44 after the used car dealership reported weaker than expected sales.

BUYBACKS: Microsoft said it will buy back $40 billion in stock and also raised its quarterly dividend. The technology giant’s stock rose 60 cents, or 1.1 percent, to $57.41. Retailer Target said it plans to buy back $5 billion in company stock, and its shares gained 47 cents to $69.09.

CURRENCIES: The euro rose to $1.1189 from $1.1157.

METALS: Gold rose $13.20, or 1 percent, to $1,331.40 an ounce. Silver gained 49 cents, or 2.5 percent, to $19.77 an ounce. Copper fell 1 cent to $2.16 a pound.

OVERSEAS: Germany’s DAX rose 0.4 percent and the FTSE 100 of Britain added 0.1 percent. France’s CAC 40 climbed 0.5 percent. Tokyo’s Nikkei 225 reversed an early loss and closed 1.9 percent higher. The Hang Seng of Hong Kong gained 0.6 percent and South Korea’s Kospi rose 0.5 percent.

More news

Sorry to interrupt...

Your first 5 are free

Access to Newsday is free for Optimum customers.

Please enjoy 5 complimentary views to articles, photos, and videos during the next 30 days.

LOGIN SUBSCRIBE