Wall Street ends off day’s highs as Fed sees inflation picking up

US stocks finished marginally higher on Wednesday as indices gave up early gains after the Federal Reserve said it sees inflation rising this year, signaling it remains on track to boost interest rates again in March. The Fed kept rates unchanged but, in a statement following its two-day policy meeting, it repeated that it expected that “further gradual” rate hikes will be warranted. “The subtle message is that they will continue to press rates higher,” said Scott Kimball, director and portfolio manager at BMO Global Asset Management.

US STOCKS finished marginally higher on Wednesday as indices gave up early gains after the Federal Reserve said it sees inflation rising this year, signaling it remains on track to boost interest rates again in March.

The Fed kept rates unchanged but, in a statement following its two- day policy meeting, it repeated that it expected that “further gradual” rate hikes will be warranted.

“The subtle message is that they will continue to press rates higher,” said Scott Kimball, director and portfolio manager at BMO Global Asset Management.

The central bank raised rates three times last year and sees three additional hikes in 2018 even as it continues to trim its balance sheet on a largely pre-set schedule.

“They’re more confident in their expectations of rising inflation,” said Kevin Logan, Chief US Economist at HSBC Securities.

Bolstering the Fed’s view of a solid economy, ADP published a report on Wednesday showing 234,000 private sector jobs added in January compared with 185,000 expected by analysts. The US Labor Department is due to release its more comprehensive report on Friday.

The Dow Jones Industrial Average rose 72.50 points, or 0.28%, to 26,149.39, the S&P 500 gained 1.47 points, or 0.05%, to 2,823.90 and the Nasdaq Composite added 9.00 points, or 0.12%, to 7,411.48.

Stocks were lifted earlier Wednesday by a surge in Boeing which forecast better-thanexpected full-year profits and said it expects to deliver a record number of commercial aircraft in 2018, sending its shares up 4.90%.

The aerospace giant was the biggest percentage gainer on the Dow, helping pull the blue-chip index out of its biggest two-day plunge since September 2016.

The sell-off earlier in the week had been prompted by an increase in US Treasury yields to multiyear highs. The US yield curve flattened to a decade low following the Fed statement as traders sold more short-dated Treasuries.

Facebook shares dipped more than four percent in after-market trading after the social media giant reported results.

Among the S&P 500’s 11 major sectors, technology gave the biggest boost to the index.

Health care stocks continued to weigh on the three major US indices following a report on Tuesday that Amazon.com, Berkshire Hathaway and JPMorgan Chase were joining forces to cut health care costs for its US employees. The S&P 500 health care index fell 1.50%.

Analysts expect fourth-quarter S&P 500 earnings growth of 13.70%, up from 12% expected at the start of the month. So far, 37% of companies in the index have reported and 80.50% have come in above consensus estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.

The S&P 500 posted 34 new 52-week highs and three new lows; the Nasdaq Composite recorded 82 new highs and 48 new lows.

Volume on US exchanges was 8.05 billion shares, above the 7.18 billion average for the full session over the last 20 trading days. —