Stocks ended higher Wednesday, while the dollar retreated modestly against its global peers, amid mixed jobs data and the Fed's first policy decision of the year.
The Dow Jones Industrial Average barely made it to positive territory, rising 6 points, to 0.02%, to finish at 34,092. The S&P 500 gained 1.05%, while the tech-focused Nasdaq surged 2%.
Stocks were given an early downward push following a weaker-than-expected reading for U.S. manufacturing activity in January, with the The Institute for Supply Management's benchmark survey falling to a May 2020 low of 47.4 points from 48.4 in December.
Readings below 50 generally indicate economic contractions.
At the same time, the Bureau of Labor Statistics said its December Job Openings and Labor Turnover report, commonly known as JOTLS, showed a staggering 11.012 million unfilled positions in the economy, up from 10.44 million in November and well ahead of Street forecasts.
The Fed's move to raise its benchmark interest rate for the eighth consecutive policy meeting, to a range of between 4.5% and 4.75%, adding the "ongoing increases" remain appropriate going forward, was largely expected from stocks and bond traders, and had only a muted impact on the day's direction.
Fed Chairman Jerome Powell stressed that the "full effect" of rate hikes has yet to be felt, adding that rates would need to climb to a "restrictive level" and remain there for some time.
The day's caution tone, however, comes shortly on the heels of the best January performance for stocks in four years, with the S&P 500 rising 6.2% on the month.
The tech-focused Nasdaq, lifted by big gains for mega cap stocks such as Amazon (AMZN), Google (GOOGL) and Meta Platforms (META), as well as a pullback in Treasury bond yields, rose by 10.7% for its best start to the year in more than two decades.
Inflation data from Europe today could, at least indirectly, provide some fuel for those seeking a dovish pivot from the Fed Chair, with the region's consumer price index slowing for a third consecutive month to 8.5% in January, well shy of the 9% forecast and the 9.2% rate recorded over the final month of last year.
In the U.S., core consumer prices were running at an annualized rate of 3.1% over the three months ending in December, compared to their 7.2% peak over the second quarter of last year.
"Chair Powell has said that the Committee would not consider cutting rates until they are confidence that inflation is moving down to 2% in a sustained way," said Jeffrey Roach, chief economist for LPL Financial in Charlotte, North Carolina. "The markets expect the Fed to cut rates as early as July. Who is right?"
Benchmark 10-year Treasury note yields slipped to 3.406% while 2-year notes fell to 4.092%. The U.S. dollar index, meanwhile, was marked 0.93% lower at 101.15 in the wake of the Fed announcement and after Powell's 2:30 pm EST press conference in Washington.
Advanced Micro Devices (AMD) shares surged 12.6%, following the chipmaker's better-than-expected fourth quarter earnings and optimistic sector outlook.
Peloton (PTON) shares were also on the move, skyrocketed 26..5% after the fitness equipment maker posted a wider-than-expected second quarter loss but noted that its subscription business outpaced hardware sales as the group's turnaround continues to gather momentum.
On the downside, Snap (SNAP) fell 10.3% after the the messaging app maker posted a surprise fourth quarter loss and cautioned that a pullback in ad spending would continue well into the current year.
Meta Platforms (META), which owns the Facebook, Instagram and WhatsApp collection of apps and generates nearly 98% of its revenues from online advertising, was marked 2.8% lower following last night's Snap update and ahead of its own fourth quarter earnings after the closing bell.
Meta is expected to post a bottom line of $2.22 per share, down 39.5% from last year, on revenues of $31.53 billion.
Apple (AAPL), Amazon and Google parent Alphabet will all publish their December quarter earnings after the close of trading Thursday.
In overseas markets, Europe's Stoxx 600 was marked 0.23% lower in late-day Frankfurt trading, following the softer-than-expected inflation figures and modestly improving manufacturing PMI data, while Asia's region-wide MSCI ex-Japan index gained 1.09% and Japan's Nikkei 225 gained 0.07%
