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US STOCKS-S&P 500 ends at record high after Fed projects stronger economy

· 03/17/2021 16:15
US STOCKS-S&P 500 ends at record high after Fed projects stronger economy

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McDonald's rises as DB raises rating, price target

Amazon buoys S&P 500

Industrials, consumer discretionary lead among sectors

Indexes: Dow +0.58%, S&P 500 +0.29%, Nasdaq +0.40%

Adds market details after close

By Noel Randewich

- The S&P 500 and Dow Jones Industrial Average closed at record highs 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.

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. nL1N2LF2JI

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 US10YT=RR ticked lower to 1.6374%.

The Dow Jones Industrial Average .DJI rose 0.58% to end at 33,015.37 points, while the S&P 500 .SPX gained 0.29% to 3,974.12.

The Nasdaq Composite .IXIC climbed 0.4% to 13,525.20.

The Nasdaq remains down about 4% from its Feb. 12 record-high close.

Amazon.com Inc AMZN.O rose 1.4% and Tesla Inc TSLA.O added 3.7%, with the two companies giving the greatest lift to the S&P 500.

Six out of 11 S&P 500 sector indexes rose, with industrials .SPLRCI and consumer discretionary .SPNY the strongest performers and both up over 1%.

Fast-food retailer McDonald's Corp MCD.N gained 1.9% after Deutsche Bank raised its target price on the stock and also upgraded its recommendation to "buy" from "hold."

Advancing issues outnumbered declining ones on the NYSE by a 1.33-to-1 ratio; on Nasdaq, a 1.46-to-1 ratio favored advancers.

The S&P 500 posted 44 new 52-week highs and no new lows; the Nasdaq Composite recorded 124 new highs and 18 new lows.

Volume on U.S. exchanges was 11.9 billion shares, compared with the 14.2 billion average for the full session over the last 20 trading days.


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(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
+1 (415) 677 2542, Twitter: @randewich))