THE GIST (“THE WHAT”)

The highly awaited Fed policy decision proved to be non-event after the Fed raised its benchmark interest rate by 25 basis points, hiking for the 11th time in past 12 policy meetings, pushing the fed funds target range to a 22-year high of 5.25% to 5.50%. The S&P 500 index closed unchanged at 4566.74, down fractionally by 0.71 point following a whipsaw price action alongside Fed Chair Jerome Powell’s speech.

Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.

Trading Plans for TUE. 07/25: Earnings to Trump FOMC Day 1?

For the last published Results of the Morning Trading Plans, please click here

THE DETAILS (The “How & Why”):

In its attempt to tame the sticky inflation, the Fed pushed the borrowing cost to its highest level since the global financial crisis. The index spiked briefly after Powell suggested that the Fed could consider pausing rate hikes at the September FOMC meeting. Gains soon faded as he cleared that the Fed would remain data-dependent and will not hesitate to push rates higher if warranted. The 10-year Treasury yield settled at 3.857%, falling 2.8 basis points.

Technology was the worst performing sector after disappointing earnings by Microsoft and Texas Instruments soured investor sentiment. Microsoft fell 3.7% and Texas Instruments tumbled 5.42%. Chip stocks fell across the board in sympathy. Advanced Micro Devices, Analog Devices, Broadcom, and Microchip Technology all closed down more than -2%. Weakness in technology stocks were, however, limited by a 5.78% jump in Alphabet on beating earnings expectations.

Among the other decliners on the back of weaker earnings were CoStar Group, Allegion PLC, and Teledyne Technologies Inc, all leading the broader index lower by tumbling more than 6% each. On the other hand, capping the day’s losses, Union Pacific soared 10.4% to lead the gainer after announcing that its former executive Vena will replace its current CEO. Boeing also jumped 8.7% after reporting a strong better-than-expected increase in its free cash flow.

Regional banks received a major boost after Bank of California agreed to buy PacWest Bancorp. PacWest Bancorp skyrocketed 26.92%. Zions Bancorp, KeyCorp, and Comerica all closed higher by more than 6% each.