NEW YORK (MarketWatch) — U.S. stocks pulled back after the Federal Reserve’s policy-making committee reiterated it plans to remain patient and watch the data as it decides when to raise interest rates.
The Fed gave no sign that it is wavering on hiking interest rates sometime in the second half of 2015. The U.S. central bank was upbeat about the real economy, while the policymakers repeated that they think inflation will move back to the 2% target after being pushed down by transitory factors.
The Nasdaq Composite COMP, +0.10% slipped 0.2% to 4,673, despite big gains in Apple, its heaviest-weighted stock. Apple’s earnings results surprised even the most bullish analysts as the tech giant reported $ 18 billion profit in the latest quarter.
The S&P 500 SPX, -0.32% lost 0.6% to 2,018, as big gains in the tech sector were offset by even bigger losses in energy stocks.
Dan Greenhaus, chief strategist at BTIG, in emailed comments said the statement “was largely in line with expectations, largely a non-event and largely maintains the status quo narrative.”
While reaction in the stock market was muted, Treasurys rallied after the announcement. The yield on 10-year Treasury notes, which moves inversely to prices dropped 7 basis points to 1.75%.
Apple’s mind-boggling quarter
Apple surpassed even the most bullish Wall Street expectations for its holiday quarter with an improbable trifecta: selling more iPhones at higher prices—and earning more on each sale.
Goldman Sachs and others expect the first hike in short-term interest rates by September. But Ellen Zentner, an economist at Morgan Stanley, said Tuesday that she doesn’t expect a Fed hike until March 2016, partly because the downward pressure on inflation is stronger than expected.
A strong dollar, which has been cutting into corporate earnings, and weak oil prices have investors hoping the Fed will delay that hike, and they will be looking for a signal to support that from the statement.
Apple earnings: Apple shares jumped 7% after the company reported another record for its flagship iPhone, with 74.5 million phones sold in the fiscal first quarter. Profit rose 38% to a record high.