U.S. stocks erased earlier losses and jumped higher Wednesday after the Federal Reserve said it sees no interest rate hikes through 2023 and that it will let inflation run hotter than usual to ensure a full economic recovery.
The Dow Jones Industrial Average gained 189.42 points, or 0.6%, to 33,015.37, marking the first time the blue-chip benchmark has closed above the 33,000 threshold.
The S&P 500 erased a 0.7% loss and rose 0.3% to a record closing high of 3,974.12.
The Nasdaq Composite wiped out earlier losses and ended the day 0.4% higher at 13,525.20.
The tech-heavy benchmark fell 1.5% at one point as growth stocks came under pressure amid surging bond yields again.
While the Fed expects benchmark interest rates to remain near zero for the next two years, the central bank upgraded their economic outlook to reflect expectations for a stronger recovery from the pandemic-triggered recession. Gross domestic product is expected to grow 6.5% in 2021 before cooling off in later years.
The 10-year Treasury yield came off its high of the day following the central bank’s update, rising 2 basis points to 1.64%. Earlier in the session, the benchmark rate jumped to 1.689%, hitting a level unseen since late January 2020. Higher rates have been hurting growth-oriented companies particularly hard as they erode the value of future cash flows.
Reference: CNBC
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