News: S&P 500 ends at record high after Fed projects stronger economy.
(Reuters) – The S&P 500 and Dow Jones Industrial Average closed at record highs on Wednesday after the Fed forecast a rapid economic recovery from the coronavirus pandemic and announced it would keep interest rates near zero.
In their statement following their two-day political meeting, the Federal Reserve forecast a rapid spike in US economic growth and inflation this year as the COVID-19 crisis eased and reiterated its pledge to keep the target interest rate at zero for years on Come .
Wall Street expanded its profits after Fed Chairman Jerome Powell said during a news conference that it was too early to discuss measures to support the weak economy.
“Today’s Fed statement was more optimistic than expected. They have raised their prospects for both economic growth and the labor market. According to the market, the statement was pretty optimistic, ”said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
A $ 1.9 trillion spending incentive and the introduction of vaccines have resulted in a rotation into so-called value stocks, which are believed to outperform as the economy recovers from the coronavirus pandemic.
At the same time, fears that the stimulus could overheat the economy and lead to higher inflation rates have sparked a sharp surge in long-term government bond yields and made tech and other growth stocks less attractive.
Following the Fed’s statement, the 10-year government bond yield 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 rose 0.4% to 13,525.20.
The Nasdaq remains down around 4% from its record high on February 12.
Amazon.com Inc was up 1.4% and Tesla Inc was up 3.7%, with the two companies giving the S&P 500 the biggest boost.
Six of eleven S&P 500 industry indices rose, with industrial and consumer staples performing the strongest, both rising over 1%.
Fast food retailer McDonald’s Corp was up 1.9% after Deutsche Bank raised its target price and improved its “buy” rating from “hold”.
Advancing issues outperformed declining issues on the NYSE by a ratio of 1.33 to 1; On Nasdaq, a ratio of 1.46 to 1 favored the advanced.
The S&P 500 posted 44 new 52-week highs and no new lows. The Nasdaq Composite made 124 new highs and 18 new lows.
The volume on the US exchanges was 11.9 billion shares, compared to the average of 14.2 billion for the entire session over the last 20 trading days.
Reporting by Noel Randewich in Oakland, California; Additional coverage from Shashank Nayar and Medha Singh in Bengaluru; Adaptation by Matthew Lewis
Original Source © Reuters