(Reuters) – The S&P 500 and Dow Jones Industrial Average closed at record highs on Wednesday after the Fed predicted a rapid economic recovery from the coronavirus pandemic and said it would keep its interest rate close to zero.
In its statement following its two-day policy meeting, the Federal Reserve predicted a rapid jump in US economic growth and inflation this year as the COVID-19 crisis eases, and reiterated its promise to keep its target interest rate close to zero for years to come. .
Wall Street increased profits after Fed Chairman Jerome Powell said at a press conference that it is too early to discuss winding-down measures to support the struggling economy.
Today’s Fed statement was more optimistic than some expected, raising their outlook for both economic growth and the labor market. The market’s view of the statement is that it was fairly optimistic, ”said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
A $ 1.9 trillion spending boost and vaccine rollout have spawned a spin towards so-called value stocks that are likely to outperform as the economy recovers from the coronavirus pandemic.
At the same time, concerns that the stimulus could overheat the economy and lead to higher inflation rates have led to a surge in long-term Treasury yields and made technology and other growth stocks less attractive.
Following the Fed’s statement, the yield on 10-year government bonds fell to 1.6374%.
The Dow Jones Industrial Average rose 0.58% to finish at 33,015.37 points, while the S&P 500 rose 0.29% to 3,974.12.
The Nasdaq Composite climbed 0.4% to 13,525.20.
The Nasdaq remains about 4% below the record high of Feb. 12.
Amazon.com Inc was up 1.4% and Tesla Inc added 3.7%, with the two companies giving the biggest boost to the S&P 500.
Six of the 11 S&P 500 sector indices rose, with industrials and consumer discretionary the strongest, both up more than 1%.
Fast food retailer McDonald’s Corp gained 1.9% after Deutsche Bank raised its target price on the stock and also upgraded its recommendation to ‘buy’ from ‘hold’.
On the NYSE there were more problems than the decreasing problems with a ratio of 1.33 to 1; on Nasdaq, a ratio of 1.46 to 1 was in favor of progress.
The S&P 500 posted 44 new highs in 52 weeks and no new lows; the Nasdaq Composite recorded 124 new highs and 18 new lows.
The volume on the US stock markets was 11.9 billion shares, compared to the average of 14.2 billion for the full session over the past 20 trading days.
Reporting by Noel Randewich in Oakland, California; Additional reporting by Shashank Nayar and Medha Singh in Bengaluru; Editing by Matthew Lewis