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Fed leaves policy rate unchanged as expected

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Statement indicates next move will be a cut

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Fed Chair Powell: further inflation progress not assured

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Job openings hit three-year low

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Indexes up: Dow 1.16%, S&P 0.80%, Nasdaq down 1.13%

By Stephen Culp

NEW YORK, May 1 (Reuters) -

U.S. stocks initially wavered but rose on Wednesday after

the U.S. Federal Reserve left its key interest rate unchanged,

as expected, but indicated that its next move will probably be

to cut rates.

The three major U.S. stock indexes were last in positive

territory.

The Federal Open Markets Committee (FOMC) concluded its

two-day monetary policy meeting with a unanimous decision to let

the Fed funds target rate stand at 5.25%-5.50%.

"They left rates unchanged and the note mentions a lack of

further progress on inflation," said Peter Cardillo, chief

market economist at Spartan Capital Securities in New York.

"That's no surprise."

The accompanying statement left the timing of any rate cut

in doubt, and Fed officials underscored their concern that the

first months of 2024 have done little to build the confidence

they seek in falling inflation.

At a press conference, Chair Powell said the central

bank remains committed to its 2% inflation target and that the

labor market was normalizing, citing data released on Wednesday

showing job openings dropping to a three-year low.

First-quarter reporting season has breezed passed the

halfway point, with 310 of the companies in the S&P 500 index

having reported. Of those, 77% posted consensus-beating

earnings, according to LSEG.

Analysts now expect aggregate first-quarter S&P 500 earnings

growth of 6.6% year-on-year, a significant improvement over the

5.1% estimate as of April 1, LSEG data showed.

Among individual companies, Advanced Micro Devices ( AMD )

shed 7.4% after its disappointing artificial intelligence chip

sales forecast, while Super Micro Computer ( SMCI ) slid 11.0%

following the company's quarterly revenue miss.

The weak results pulled the Philadelphia Semiconductor Index

1.3% lower.

Amazon.com ( AMZN ) rose 4.5% on better-than-expected

quarterly results as interest in AI helped drive cloud-computing

growth.

Johnson & Johnson ( JNJ ) advanced 4.8% after it said it

will proceed with a proposed $6.48 billion lawsuit settlement

over allegations that its baby powder and other talc products

cause ovarian cancer.

Starbucks ( SBUX ) tumbled 17.2% after the coffee chain cut

its sales forecast as it posted the first drop in same-store

sales in nearly three years.

CVS Health ( CVS ) plunged 16.9% after the healthcare

company's earnings fell short of consensus and it slashed its

annual profit forecast.

At 2:46 p.m. ET, the Dow Jones Industrial Average

rose 438.28 points, or 1.16%, to 38,254.2. The S&P 500

gained 40.06 points, or 0.80%, at 5,075.75 and the Nasdaq

Composite added 177.25 points, or 1.13%, at 15,835.07.

Among the 11 major sectors of the S&P 500, communication

services enjoyed the largest percentage gain, while

energy stocks were the laggards.

Advancing issues outnumbered decliners on the NYSE by a

2.13-to-1 ratio; on Nasdaq, a 1.94-to-1 ratio favored advancers.

The S&P 500 posted nine new 52-week highs and 10 new

lows; the Nasdaq Composite recorded 40 new highs and 89 new

lows.