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US STOCKS-U.S. stocks cut losses after Fed statement

· 03/17/2021 14:37
US STOCKS-U.S. stocks cut losses after Fed statement

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McDonald's rises as DB raises rating, price target

Apple weighs on S&P 500, Amazon buoys index

Indexes: Dow +0.42%, S&P 500 -0.05%, Nasdaq -0.26%

Updates to reflect S&P 500 and Nasdaq gaining

By Noel Randewich

- The S&P 500 and the Nasdaq cut earlier losses on Wednesday after the Fed predicted a fast economic recovery from the coronavirus pandemic and said it would maintain its interest rate close to zero.

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. nL1N2LE1D0

"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 US10YT=RR ticked lower to 1.6374%.

The Dow Jones Industrial Average .DJI was up 0.42% at 32,962.66 points, while the S&P 500 .SPX lost 0.05% to 3,960.8.

The Nasdaq Composite .IXIC dropped 0.26% to 13,436.11.

Amazon.com Inc AMZN.O rose 1% and gave the greatest lift to the S&P 500, while Apple Inc's AAPL.O 1.3% decline weighed the index down more than any other stock.

Just over half of the S&P 500 sector indexes were higher, with industrials .SPLRCI and consumer discretionary .SPNY each up less than 1% and among the strongest performers.

The S&P 500 and the Dow on Monday reached all-time closing highs while the Nasdaq has recovered more than half of its losses following a selloff in late February and early March.

Fast-food retailer McDonald's Corp MCD.N gained 1.7% after Deutsche Bank raised its target price on the stock and also upgraded its recommendation to "buy" from "hold."

Declining issues outnumbered advancing ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored decliners.

The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 89 new highs and 15 new lows.

(Reporting by Noel Randewich in Oakland, Calif.
Additional reporting by Shashank Nayar and Medha Singh in Bengaluru
Editing by Matthew Lewis)

((noel.randewich@tr.com; (415) 677 2542, Twitter: @randewich))