While you were sleeping: Stocks soar as Fed flags unwinding balance sheet

Wall Street advanced to record highs amid better-than-expected corporate earnings including from Boeing while the US Federal Reserve signalled it would begin unwinding its balance sheet "relatively soon."

At the end of its two-day meeting, the Federal Open Market Committee kept its target interest rate steady, saying "near-term risks to the economic outlook appear roughly balanced" though it "is monitoring inflation developments closely."

"The committee expects to begin implementing its balance sheet normalisation program relatively soon, provided that the economy evolves broadly as anticipated," it said in a statement.

Wall Street rose. At the close of trading in New York, the Dow Jones Industrial Average rose 097.58 points, or 0.45%, to 21,711.01, a record high. The Nasdaq Composite Index added 0.16% to 6422.75, also a new high, and the Standard & Poor's 500 Index was less than a point higher at 2477.83.

All major benchmarks also reached record intra-day highs: The Dow at 21,742.70, the S&P 500 at 2481.69 and the Nasdaq at 6432.38.

"I expect an announcement of the onset of the balance-sheet reduction at the conclusion of the September meeting, effective on the first of October," Carl Tannenbaum, chief economist at Northern Trust in Chicago, told Bloomberg after Wednesday's Fed statement.

Boeing reaches record
In the Dow, Boeing shares surged 9% to $US233.45, topping Goldman Sachs as the priciest, after posting quarterly earnings that exceeded expectations.

Bucking the trend were shares of McDonald's and Cisco, down 1.8% and 1.7% respectively.

Boeing also upgraded its full-year earnings outlook.

"Our teams are delivering better performance in every segment of the business, which is reflected in our strong second-quarter results and improved 2017 outlook," Chief Executive Officer Dennis Muilenburg said in a statement.

"Our robust cash flow enabled us to return more value to shareholders, invest in future growth and in our people, including a plan to accelerate pension funding that also reduces risk and cyclicality in our business."

Going better for Coke
Coca-Cola rose 1.1% after the company posted quarterly profit that bettered analysts expectations, bolstered by low- and no-calorie sparkling soft drinks as well as non-carbonated beverages.

"Not only did we see strong performance during the quarter in rapidly expanding areas of our company, such as our Innocent juice and smoothie business in Europe, our organic revenue growth in sparkling soft drinks was led by innovation in and marketing support for our low- and no-sugar options like Coca-Cola Zero Sugar, which continues to roll out around the world," James Quincey, chief executive officer, said in a statement.

"Our performance gives us confidence that we will achieve our full year financial objectives even in the face of challenging conditions, and also demonstrates further success in evolving our portfolio to meet changing consumer tastes and preferences."

Among other strong results, AT&T rose 5%, to $US38.03 – the stock’s best day since March 2009 – and Advanced Micro Devices clibed 4.6%, to $US14.76.

Amazon tops $US500 billion
Amazon.com shares rose 1.2%, to an all-time high of $US1052.80, giving the e-commerce giant a market value above $US500 billion for the first time, ahead of its earnings result to be issued on Thursday.

In the latest US economic data, a Commerce Department report showed new home sales rose 0.8% to a seasonally adjusted annual rate of 610,000 units in June. However, it also showed a downwardly-revised sales pace for each of the three months to June.

"We need the housing market to be strong if the economy is to accelerate," Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, told Reuters. "The housing market has been wandering around for most of 2017 and it isn't clear if that pattern will change anytime soon."

In Europe, the Stoxx 600 Index rose 0.5%, the UK's FTSE 100 Index rose 0.2%, Germany's DAX Index gained 0.3% and France's CAC 40 Index climbed 0.6%.

(BusinessDesk)