Wall Street gains on Fed’s viewComment on this story
New York - US stocks rose on Wednesday, with the S&P 500 ending at a record after the Federal Reserve hinted at a slightly faster pace of interest-rate increases starting next year but suggested rates in the long run would be lower than it had indicated previously.
The benchmark S&P 500 set intraday and closing record highs while the CBOE Volatility Index or the VIX, Wall Street's fear gauge, fell to its lowest since February 2007.
“It's onwards and upwards for equities, especially after the Fed's announcements today,” said Mike Arone, chief investment strategist for State Street Global Advisors' intermediary business in Boston.
“There is an improved labor environment and inflation that is still below what the Fed considers a normal level,” Arone said. “I think that environment shapes up very well for risk assets and equities in particular.”
After a two-day policy meeting, the US central bank slashed its forecast for US economic growth this year to a range of between 2.1 percent and 2.3 percent from an earlier projection of around 2.9 percent. But the Fed's forecasts for 2015 and 2016 were unchanged, and it expressed confidence that the recovery was on track.
“Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace,” Fed Chair Janet Yellen told a news conference. “The economy is continuing to make progress towards our objectives” of full employment and 2 percent inflation.
As widely expected, the Fed pushed ahead with plans to wind down one of its main stimulus programs, reducing its monthly bond purchases to $35 billion from $45 billion.
The Dow Jones industrial average rose 98.13 points or 0.58 percent, to end at 16,906.62. The S&P 500 gained 14.99 points or 0.77 percent, to 1,956.98, a record closing high. The Nasdaq Composite added 25.60 points or 0.59 percent, to 4,362.84.
Wednesday's advance pushed the S&P 500 above its previous record closing high of 1,951.27, which was set on June 9.
The S&P 500 index has gained 1.1 percent for the week as investors largely shrugged off mounting tensions in Iraq and focused on a flurry of merger and acquisition activity as well as on better-than-anticipated manufacturing data.
The VIX slid 12 percent to close at 10.61, its lowest in more than seven years. Part of the drop was because of options contract expirations on Friday.
Among the biggest gainers was FedEx Corp, which rose 6.2 percent to $148.95 after hitting an all-time intraday high of $149.34. The world's No. 2 package delivery company reported better-than-expected quarterly revenue. The stock's gain helped push the Dow Jones Transportation Average up 1.5 percent.
Amazon.com Inc shares jumped 2.7 percent to $334.38 after Chief Executive Officer Jeff Bezos unveiled a “Fire” smartphone with free, unlimited photo storage, jumping into a crowded field dominated by Apple and Samsung Electronics.
Adobe Systems shares shot up 8.2 percent to $73.08. Adobe was the S&P 500's best performer a day after the maker of Photoshop and Acrobat software reported better-than-expected quarterly profit and revenue.
One of the wallflowers at Wall Street's party, however, was ConAgra Foods, whose stock slid 7.3 percent to $30.47 after the maker of Hunt's tomato ketchup and Slim Jim beef jerky warned about fourth-quarter results.
Volume was around 5.94 billion shares on US exchanges, above last month's average of about 5.76 billion, according to data from BATS Global Markets. - Reuters