US Federal Reserve holds rates as Wall Street edges higher, ASX futures point to small gain

The Federal Reserve voted 10-2 to keep its benchmark interest rate in the 3.75% to 4.00% range, saying inflation is still elevated and that future policy will depend on incoming information. The decision was widely expected and markets responded with modest gains on Wall Street.

In New York trade the S&P 500 rose 0.2%, bringing it within about 1% of its all-time high recorded earlier this month. The Dow was up 149 points or 0.3%, while the Nasdaq was little changed in mid-afternoon trade.

Australian sharemarket futures were signalling a rise at the open, with contracts at 5.05am AEDT pointing to a gain of 24 points or 0.3%. The ASX had closed flat on Wednesday and the Australian dollar was trading at US70.35¢.

The Federal Open Market Committee reiterated that it would act to restore inflation to its 2% target and upgraded its view of the economy, but left the timing of any further increases unclear. The statement said officials will use additional data to determine the appropriate stance of policy as they seek a timely return of inflation to target.

Federal Reserve chair Kevin Warsh emphasised changes in credit conditions following the decision:

"The Fed has started to see some changes in financial and credit conditions. They have tightened for some businesses and households."

Two members of the committee, Governor Lisa Cook and Cleveland Fed president Beth Hammack, dissented in favour of a quarter-point hike. The Fed raised rates last month for the first time in three years, a move that ran counter to President Donald Trump’s calls for rate cuts.

Earnings news supported the stock market. GE HealthCare Technologies jumped 7.2% after reporting quarterly profit and revenue above analyst forecasts and lifting its full-year revenue outlook. Etsy climbed 5.3% after delivering stronger-than-expected profit and reporting growth in active buyers and its fastest expansion of the seller base in two years.

Stocks tied to artificial intelligence and semiconductors held up after bouts of volatility this week. South Korea’s SK Hynix surged 10.9% in Seoul after a profit report that flagged rising AI demand, and Micron Technology advanced 4.7% on Wall Street, helping lift the S&P 500.

Other notable moves included Wendy’s, which jumped 15.1% after Trian Fund Management offered to buy the chain, Boston Scientific, which fell 5% despite a softer-than-expected profit decline and cautious guidance, and Robinhood Markets, down 4.2% after missing revenue and profit estimates.

Bond yields ticked higher with the 10-year US Treasury yield at about 5.03%, up from 4.99% late Tuesday and off its peak above 5.30% earlier in the month. Oil prices rose, with Brent crude up 2.7% to $US112.39 a barrel, as geopolitical concerns and energy market uncertainty supported higher prices.

Markets outside the US were buoyed by the moves in chips and tech: South Korea’s Kospi jumped 6.6%, Japan’s Nikkei 225 climbed 1.1%, and France’s CAC 40 added 0.1%. Futures and derivatives markets continue to price in a possible Federal Reserve rate increase in December, reflecting investor caution about the path of inflation and policy.