Wall Street Up Broadly as Fed Signals Caution With US Stimulus Taper, Rate Hike
© AP Photo / Mark LennihanThe New York Stock Exchange is shown, Tuesday, July 21, 2020.
© AP Photo / Mark Lennihan
NEW YORK (Sputnik) - Stocks on Wall Street rose broadly on Wednesday after the Federal Reserve said it will extend its stimulus support for the US economy beyond the targeted mid-2022 finish if necessary, and take even more care in raising interest rates from the near zero levels.
The blue-chip S&P 500 and the broad-based Dow Jones Industrial Average indexes ended a four-day decline on the assurance of the central bank, overturning a weak market suppressed earlier by negative speculation over the stimulus taper and rate hike.
US stocks also saw one of the worst trading days of the year on Monday on concerns about contagion from the debt crisis at China’s biggest property developer Evergrande.
“US stocks rallied as investors believe the Fed will be in no hurry to raise interest as they still think inflation will be transitory in 2022,” Ed Moya, analyst at online trading platform OANDA, said. “The biggest risk to the stock market is (an) accelerated pace of tightening and the Fed is showing that is something they will avoid unless they were dead wrong about inflation.”
The S&P 500, which groups the top 500 stocks on the New York Stocks Exchange, settled up 41.45 points, or almost 1%, at 4,395.The Dow, comprising mostly industrial stocks, rose 338 points, or 1%, to close at 34,258.
The Nasdaq Composite Index, led by Big Tech names such as Facebook, Amazon, Apple, Netflix and Google, finished up 150 points, or 1%, at 14,897.
Earlier on Wednesday, Federal Reserve Chairman Jay Powell said the central bank foresees ending its monthly stimulus support of $120 billion for the US economy by mid-2022.
Powell said the central bank will likely take longer to raise interest rates which have yet to pass its employment criteria. He also hedged the Federal Reserve's position on the deadline for the stimulus taper by saying the central bank can speed up or slow down the taper if it becomes appropriate.