U.S. stocks end higher after Powell projects stronger economy

(Reuters) – Wall Street ended higher on Wednesday after the Fed predicted a fast economic recovery from the coronavirus pandemic and said it would maintain its interest rate at close to zero.

FILE PHOTO: The front facade of the New York Stock Exchange (NYSE) is seen in New York, U.S., March 1, 2021. REUTERS/Brendan McDermid

In its statement following its two-day policy meeting, the Federal Reserve projected a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down, and repeated its pledge to keep its target interest rate near zero for years to come.

Wall Street extended gains after Fed Chair Jerome Powell said during a news conference that it is too early to discuss tapering-off measures to support the struggling economy.

“The Fed statement today was more optimistic than some expected, they raised 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 stimulus and the rollout of vaccines have fueled a rotation into so-called value stocks that are viewed as likely to outperform as the economy recovers from the coronavirus pandemic.

At the same time, worries that the stimulus could overheat the economy and lead to higher inflation rates have triggered a strong rise in long-duration Treasury yields and made technology and other growth stocks less attractive.

Following the Fed’s statement, the yield on 10-year Treasuries ticked lower to 1.6374%.

Unofficially, the Dow Jones Industrial Average rose 193.24 points, or 0.59%, to 33,019.19, the S&P 500 gained 11.58 points, or 0.29%, to 3,974.29 and the Nasdaq Composite added 53.64 points, or 0.4%, to 13,525.20.

Amazon.com Inc rose, giving the greatest lift to the S&P 500.

Most of the S&P 500 sector indexes rose, with industrials and consumer discretionary among the strongest performers.

Fast-food retailer McDonald’s Corp gained after Deutsche Bank raised its target price on the stock and also upgraded its recommendation to “buy” from “hold.”

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