Stocks rise as Fed holds rates steady

Los Angeles Times - - BUSINESS -

Stocks edged higher Wed­nes­day af­ter the Fed­eral Re­serve re­as­sured in­vestors it was in no rush to raise in­ter­est rates from his­tor­i­cally low lev­els.

The cen­tral bank said that the econ­omy is strength­en­ing, but not enough for pol­i­cy­mak­ers to sig­nal an im­mi­nent rate hike. The Fed’s bench­mark rate has re­mained near zero for more than six years in an ef­fort to bol­ster the econ­omy and en­cour­age bor­row­ing, lend­ing and in­vest­ment.

Surg­ing stocks and his­tor­i­cally low in­ter­est rates have gone hand in hand over the last six years, push­ing the mar­ket to all-time highs.

As the econ­omy has re­cov­ered, in­vestors have been try­ing to gauge when the Fed will be­gin rais­ing rates and how ag­gres­sively it will raise them. In­vestors worry that, should the Fed raise rates too quickly, it could stif le growth.

“This makes the mar­ket feel more con­fi­dent,” said Alan Rechtschaf­fen, fi­nan­cial ad­vi­sor at UBS Wealth Man­age­ment Amer­i­cas.

The Dow Jones in­dus­trial av­er­age gained 31.26 points, or 0.2%, to 17,935.74. The Stan­dard & Poor’s 500 in­dex rose 4.15 points, or 0.2%, to 2,100.44. The Nas­daq com­pos­ite rose 9.33 points, or 0.2%, to 5,064.88.

Bond prices rose af­ter the Fed re­leased its state­ment, re­vers­ing an ear­lier sell-off.

Eight of the 10 sec­tors in the S&P 500 in­dex ended the day higher, with util­i­ties lead­ing the gains. The sec­tor rose 0.9% but re­mains down 9.7% this year.

The ma­jor stock in­dexes re­main close to their record highs set in May but have sagged in the last month as in­vestors have fo­cused on the Fed.

The Dow is still up 0.6% this year de­spite drop­ping 2% from its last record close on May 19. The S&P is up 2% for the year and off 1.4% from its high on May 21. The Nas­daq is far­ing the best. It’s up 6.9% this year and off less than 1% from its most-re­cent high May 27.

The yield on the 10-year Trea­sury note fell to 2.31% from 2.38% just be­fore the state­ment was re­leased.

Aside from the Fed, in­vestors were also keep­ing an eye on ne­go­ti­a­tions be­tween Greece and its lenders.

Greece re­mained dead­locked in talks with cred­i­tors Wed­nes­day, and there was lit­tle sign of a break­through a day ahead of a meet­ing of the 19 fi­nance min­is­ters from coun­tries that use the euro. Greece needs to get more loans be­fore the end of the month, when its bailout pro­gram ex­pires and it is sched­uled to make a big pay­ment to the In­ter­na­tional Mon­e­tary Fund.

Euro­pean mar­kets have slumped in the last month as the talks have failed to pro­duce an agree­ment. Greece’s bench­mark in­dex sank 3% on Wed­nes­day and is down 18% this year.

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