Stocks reverse course, rise after Fed comments

Stocks closed higher Wednesday, reversing an early slide after the Federal Reserve reassured Wall Street that it expects to keep its key interest rate near zero through 2023.

The central bank’s renewed commitment to keeping rates at rock-bottom lows comes even as its latest economic forecast calls for growth of 6.5 percent this year and for inflation to rise above 2 percent for the first time in years. Wall

Street has been anxious about the potential for higher inflation and has been looking for signs that the central bank shares investors’ concerns.

Fed Chair Jerome Powell’s remarks during a news conference appeared to do the trick. Major stock indexes had been down for most of the day, led by another wave of selling in technology companies as bond yields rose, driving the closely watched 10-year Treasury yield to 1.64 percent, the highest level since February 2020.

After Powell spoke, stocks gradually pivoted higher and bond yields fell. The turnaround nudged the S&P 500 and Dow Jones Industrial Average to all-time highs and pulled the tech-heavy Nasdaq out of the red.

“He reassured the market that the Fed is going to the extent possible be patient about even talking about raising rates,” said Willie Delwiche, investment strategist at All Star Charts.

The S&P 500 rose 11.41 points, or 0.3 percent, to 3,974.12, recovering from a 0.7 percent slide. The benchmark index has now notched an all-time high 14 times this year. The Dow gained 189.42 points, or 0.6 percent, to 33,015.37. The Nasdaq, which had been down 1.5 percent, rose 53.64 points, or 0.4 percent, to 13,525.20.

Banks, industrial stocks and companies that rely on consumer spending helped lift the market. Those gains outweighed a pullback in health care, utilities and other sectors.