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Treasuries rose, the dollar pared gains and U.S. stocks remained mixed as the Federal Reserve kept interest rates unchanged and reiterated a slow pace of tightening even as the economy shows signs of improvement.
Gold advanced.
Prior to the statement, earnings set the tone in Wednesday's session, as a rally in Apple Inc. was offset by earnings-fueled declines in companies from Coca-Cola to Twitter.
The Bloomberg Dollar Spot index erased gains, while the yield on 10-year Treasury notes fell five basis points to 1.51 percent. Gold futures jumped 1.3 percent.
"The Fed seems to be leaning a little more towards a raising of the rates, though with the election coming up I wouldn't say a hike is imminent," said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa. "We've seen the U.S. data firming up recently. So maybe by the end of the year if we continue to see growth."
The Fed left interest rates unchanged while saying risks to the U.S. economy have subsided and the labor market is getting tighter, suggesting conditions are getting more favorable for an increase in borrowing costs.
U.S. central bankers are taking stock of the economy's progress in the wake of the U.K.'s vote last month to leave the European Union, as well as the large swing from May's soft labor report to June's rebound. While Chair Janet Yellen has repeatedly stated that the Fed is likely to raise interest rates gradually, market volatility and the unexpected dip in job gains have delayed such plans.
"They like the economy. If things run smoothly through the fall you could see a December rate hike happening," Mark Kepner, managing director and equity trader at Chatham, New Jersey-based Themis Trading, said by phone. "The Fed is looking at this saying we made it through the first phase where the Brexit vote went a way people didn't think it would go, we had a selloff, but things have improved remarkably since then and they've noticed that."
A monthlong advance in global equities has faltered as corporate results continue to paint a muddled picture on the state of the worldwide economy. Recent economic data in the U.S. have beaten forecasts by the biggest margins since December 2014, clouding the timing for the Fed's next rate increase. Japan is expected to boost stimulus to jumpstart its flagging economy.
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The S&P 500 index was little changed at 2,169.08 at 3:11 p.m. in New York, rising about 0.3 percent in the hour after the Fed's decision. The Dow Jones Industrial Average rose 0.2 percent.
U.S. stocks spent most of the session mixed, with earnings reports setting the tone. Apple rallied after saying iPhone demand picked up and forecasting fourth-quarter sales that may exceed analysts' estimates. European suppliers Dialog Semiconductor and AMS AG climbed at least 4 percent. That boosted the Nasdaq 100 index by 0.8 percent.
Twitter tumbled after giving a third-quarter revenue forecast that trailed projections. Coca-Cola dropped on second-quarter sales that trailed analysts' estimates. McDonald's headed for its biggest two-day slide since August.
"When you throw some disappointing earnings reports and some nervousness about interest rates together, you see the market catch a bit of a down draft like today," said Terry Morris, a senior equity manager who helps oversee about $3.2 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust. "But when you put it in context, it's still up nicely for the year and nicely for the month."
Earnings also dominated in Europe, with the Stoxx Europe 600 rising to a one-month high after four days of ending little changed. LVMH Moet Hennessy Louis Vuitton SE jumped after the world's biggest luxury-goods maker reported stronger demand for its champagnes and cognacs. PSA Group surged, leading a gauge of automakers to the best gain among industry groups.
The Shanghai Composite index slid 1.9 percent after the 21st Century Business Herald reported the country's banking regulator is considering tightening curbs on the $3.6 trillion market for wealth management products.
Egyptian stocks rallied the most in the world, surging 5 percent, after the government said it's negotiating an International Monetary Fund loan to help revive the economy.
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The Bloomberg Dollar Spot index, a gauge of the greenback against 10 major peers, fell 0.1 percent after rising before the Fed decision. Policy makers underscored a gradual pace toward tighter monetary policy, casting doubt on officials' willingness to raise borrowing costs before year-end.
The yen fell by the most in almost two weeks after Japanese Prime Minister Shinzo Abe surprised markets with a fiscal-stimulus package exceeding 28 trillion yen ($265 billion) as he seeks to jump-start the country's floundering economy.
The yen weakened 1 percent to 105.71 per dollar, after advancing 1.4 percent in the previous two days.
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Benchmark 10-year Treasury note yields fell four basis points, or 0.04 percentage point, to 1.52 percent as of 2:24 p.m. in New York, according to Bloomberg Bond Trader data. Ten-year yields set a record-low 1.318 percent on July 6.
Treasuries have rallied in 2016 as the Fed held off on raising rates after liftoff from near zero in December, while central banks in Japan and Europe maintained unprecedented stimulus.
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Oil dropped to a three-month low in New York after government data showed that U.S. crude stockpiles unexpectedly climbed last week, halting the longest streak of declines on record. West Texas Intermediate oil for September delivery dropped 2 percent to $42 a barrel in New York. Prices touched $41.84, the lowest since April 20.
Gold headed for a second straight gain as the Fed reiterated plans to slowly tighten. Futures for December delivery advanced 0.8 percent to $1,338.30 an ounce.
Copper futures for delivery in September lost 1.6 percent to $2.1895 a pound on the Comex. A close at that price would mark the biggest drop since July 5. Silver futures for September delivery climbed 1.8 percent to $20.04 an ounce.
Commodities will probably rebound next year as demand strengthens, according to the World Bank, adding its voice to those including Citigroup who've forecast that 2017 may be a better year for raw-material prices.