(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 after the two-day political meeting, the Federal Reserve projected a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis ended and reiterated its commitment to keep your target interest rate at zero come.
Wall Street expanded gains after Fed Chairman Jerome Powell said during a news conference that it is too early to discuss austerity measures to support the troubled economy.
“Today’s Fed statement was more optimistic than some expected, they raised their prospects for both economic growth and the job market. The market’s view of the statement is that it was quite optimistic,” said David Carter , investment director of Lenox Wealth Advisors in New York.
A $ 1.9 trillion spending stimulus and vaccine deployment have fueled a rotation toward so-called value stocks that are considered likely to be surpassed 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 sharp rise in long-term Treasury yields and led to technology and other growth actions being less attractive.
Following the Fed’s statement, the ten-year Treasury yield fell to 1.6374%.
The Dow Jones Industrial Average rose 0.58% to 33,015.37 points, while the S&P 500 gained 0.29% to 3,974.12.
The Nasdaq Composite rose 0.4% to 13,525.20.
The Nasdaq continues to fall about 4% from its record close on February 12th.
Amazon.com Inc. rose 1.4% and Tesla Inc. added 3.7%, with both companies giving the biggest boost to the S&P 500.
Six out of 11 S&P 500 sector indices rose, with industrialists and consumers discretionally the strongest and both topping 1%.
Fast food retailer McDonald’s Corp. gained 1.9% after Deutsche Bank raised its stock price target and also updated its “hold” “buy” recommendation.
Advanced issues outperformed NYSE declines by a ratio of 1.33-to-1; on the Nasdaq, a ratio of 1.46 to 1 favored the forwards.
The S&P 500 recorded 44 new highs of 52 weeks and no new lows; the Nasdaq Composite recorded 124 new highs and 18 new lows.
The volume of US stock markets was 11.9 billion shares, compared to the average of 14.2 billion in the full session of the last 20 trading days.
Reports by Noel Randewich in Oakland, California; Additional reports from Shashank Nayar and Medha Singh in Bengaluru; Edited by Matthew Lewis