The Dow Jones Industrial Average jumped to its high of the day Wednesday after the Federal Reserve indicated it will keep interest rates lower over the next few years.
The 30-stock Dow was up 290 points, or 1%. The S&P 500 traded 0.6% higher. The Nasdaq Composite climbed 0.2%.
The U.S. central bank kept interest rates near zero. Members of the Fed’s policymaking committee also indicated the overnight rate could stay near zero through 2023.
“With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time,” the Federal Open Market Committee said in a statement.
The central bank’s announcement followed the release of the latest data on U.S. retail sales, which rose less than expected last month.
Wednesday marks the Fed’s first decision since Chairman Jerome Powell unveiled a policy shift toward greater tolerance of inflation, effectively pledging to keep interest rates low for longer. Investors widely expect the central bank to maintain its downbeat stance on the economy. This will also be the last meeting before the U.S. presidential election. Powell is set to speak later on Wednesday.
“Their in this for the long game,” said Tom Hainlin, global investment strategist at Ascent Private Capital Management. “They’ve been looking at the unemployment data and they know what they can do, but they can’t supplement fiscal policy.”
Goldman Sachs was among the best-performing Dow components, jumping more than 2%. Walgreens Boots Alliance advanced 3.4%. IBM and Merck were both up more than 1%. FedEx released a blowout quarter with earnings well above analyst estimates, fueled by the e-commerce boom, sending the stock up more than 5%.
Earlier in the day, stocks got a boost after White House chief of staff Mark Meadows said he was optimistic about Democrats and Republicans reaching a coronavirus stimulus deal. President Donald Trump also signaled in a tweet he would back a bigger package.
Republicans and Democrats have struggled to reach a deal on further stimulus, dwindling hopes of an agreement being struck before the U.S. presidential election in November.
Wall Street was coming off a session in which the S&P 500 and Nasdaq posted solid advances amid broad market gains. Real estate, consumer discretionary and tech all rose at least 1% on Tuesday.
Technology stocks continued their broad-based rally. The Nasdaq Composite rose 1.2%, bringing its week to date gain to more than 3%. The technology-heavy index dipped in correction territory last week and suffered its worst weekly performance since March.
In corporate news, one of the hottest initial public offerings of 2020 opened for trading on Wednesday. Data storage software company Snowflake surged more than 100% in its public-market debut. The IPO was priced at $120 per share.
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