Stocks rose on Wednesday after the Federal Reserve indicated it will keep interest rates lower over the next few years.
The Dow Jones Industrial Average gained 350 points, or 1.2%. The S&P 500 traded 0.7% 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.
Fed Chairman Jerome Powell reiterated this statement, telling reporters in a news conference: “We expect to maintain an accommodative stance of monetary policy until these outcomes, including maximum employment, are achieved.”
“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.”
Treasury yields rose slightly as Powell spoke, with the benchmark 10-year rate trading at 0.688%. The 30-year bond yield climbed 3 basis points to 1.462%.
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.
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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