Bonds react to the decision and Warsh's remarks
The two-year Treasury yield rose above 4.79% after the Fed disclosed the dissenting votes, up from 4.70% late Tuesday. But it later fell as low as 4.69% when Fed Chairman Kevin Warsh said officials wanted more time to assess economic conditions before deciding their next move. The yield closely reflects expectations for Fed policy.
Warsh cited higher borrowing rates and said lenders and investors had become "more discerning." Most officials believed the Fed's "monetary medicine" is "starting to work some," he said. With the economy still growing, he described those developments as consistent with progress toward a healthy job market and relatively low inflation.
Traders continued to anticipate further rate increases, but reduced their bets on how many would occur by next summer, according to CME Group data. CNBC reported that futures pricing still showed a strong possibility of a hike at the December 2026 meeting, potentially followed by one or two more in 2027.
The 10-year Treasury yield also fluctuated after the meeting, though less sharply, and ended at 5.02%, compared with 4.99% late Tuesday. That yield reflects expectations for longer-term inflation and economic growth. Oil prices added upward pressure on yields: Brent crude rose 2% to $111.64 a barrel amid uncertainty surrounding the Middle East and the global energy industry.
Stocks stayed within a narrow range on either side of the Fed announcement. The S&P 500 finished at 7,743.98, gaining 21.38 points, or 0.3%. The Dow Jones Industrial Average closed at 52,475.10, up 97.53 points, or 0.2%, while the Nasdaq composite added 72.04 points, or 0.3%, to reach 26,549.85.
A divided hold ahead of the midterms
The decision kept the overnight federal funds rate in a target range of 3.75% to 4%, CNBC reported. The range has been in place since September's quarter-point increase, the Fed's first rate hike in three years. Inflation has exceeded the central bank's 2% target for years.
Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack both voted for another quarter-point increase, according to CNBC. For Cook, it was the first dissent since she joined the Fed in 2022.
The meeting took place days before the November 3 midterm elections, with control of Congress at stake. CNBC reported speculation among some observers that officials would be reluctant to raise rates so close to the vote. Fed officials regard political independence as a cornerstone of the institution.
Warsh also outlined changes to the Federal Open Market Committee's schedule, CNBC reported. One meeting in 2027 will be devoted solely to broad monetary policy strategy, without a rate vote or policy statement. For 2028, he expects two strategy meetings and six meetings at which officials set policy.
SK Hynix results support AI shares
Artificial-intelligence stocks held relatively firm after stabilizing earlier in the week. The sector had experienced large swings over concerns that expensive borrowing could undermine the expansion of AI data centers, much of which relies on debt.
Memory-chip maker SK Hynix gained 10.9% in Seoul after reporting earnings. The company described a reinforcing cycle of growing AI use and said demand would remain ahead of supply through 2030.
According to Yahoo Finance, SK Hynix's third-quarter 2026 revenue reached a record of roughly $78.7 billion, a 328% increase from a year earlier. Operating profit rose 632% to about $62.7 billion, producing an 80% operating margin. Demand from AI data centers, higher memory prices and early HBM4 shipments drove the results.
The company said long-term agreements already cover more than half its capacity for 2027–2028 and reiterated its expectation that the AI memory shortage would last through 2030. It also announced an additional $45 billion in shareholder returns, taking annual buybacks and dividends to a record $75.2 billion.
SK Hynix, which listed on the Nasdaq earlier in 2026, saw its U.S.-listed shares rise more than 9% on Wednesday. South Korean rival Samsung Electronics gained 9%. On Wall Street, memory-chip maker Micron Technology advanced 5.9%, contributing more to the S&P 500's rise than any other stock.
Earnings winners, deal news and overseas markets
With higher interest rates weighing on stock prices, companies face pressure to produce profit growth. Several earnings reports gave investors reasons to buy on Wednesday.
GE HealthCare Technologies gained 6.6% after reporting summer profit and revenue above analysts' estimates. It also lifted its full-year outlook for revenue growth and other financial measures.
Etsy's shares climbed 5.4% following quarterly profit well above forecasts. CEO Kruti Patel Goyal said the marketplace's active-buyer count increased from a year earlier for the first time in two years. Its active-seller base also expanded at its fastest pace in two years.
Wendy's rose 15.1% after Nelson Peltz's Trian Fund Management offered to acquire the restaurant chain. Among the decliners, Boston Scientific lost 5.8%. Its quarterly profit fell less than analysts had expected, but its earnings outlook for the current quarter missed their estimates. Robinhood Markets dropped 3.3% after both quarterly profit and revenue came in below expectations.
In overseas trading, the rally in SK Hynix helped South Korea's Kospi advance 6.6%. Japan's Nikkei 225 gained 1.1%, while France's CAC 40 slipped less than 0.1%.
