NEW YORK: Wall Street’s main stock indices closed higher on Wednesday (March 20) after the Federal Reserve (Fed) eased investor jitters by keeping borrowing costs unchanged and reinforcing expectations that rates could be cut as many as three times this year.
The Dow Jones Industrial Average rose 401.37 points, or 1.03%, to 39,512.13, the S&P 500 gained 46.11 points, or 0.89%, to 5,224.62 and the Nasdaq Composite gained 202.62 points, or 1.25%, to 16,369.41.
The Fed’s policy statement described inflation as remaining “elevated”, and it raised economic projections for economic growth and lowered its projection for the unemployment rate from estimates it provided in December.
Stocks added to gains after Fed chair Jerome Powell said in a press conference that despite recent inflation data coming in hotter than expected, the numbers “haven’t really changed the overall story, which is that of inflation moving down gradually, on a somewhat bumpy road”.
Strategists said Wall Street was reassured by Powell’s comments on inflation and the labour market and his signal that the Fed will slow the pace of its drawdown of bond holdings.
“He said he wasn’t trying to dismiss any data but he kind of gave the market a reason they could use to dismiss the data,” said Alex Coffey, senior trading strategist at TD Ameritrade.
“We came in to this day feeling Jerome Powell might push back on market expectations or pivot away from dovish expectations since December because of the data we’ve had in the last two months,” Coffey said. “While he didn’t necessarily go full dove, it was dovish versus recent market worries.”
Nine of the S&P's 11 major sectors advanced, with five of them climbing more than 1%. Consumer discretionary led the way with a 1.5% gain.
The health sector was the weakest, falling 0.23%.
In healthcare, US-listed shares of BioNTech dropped 4.4% after it reported a 2023 revenue and earnings plunge as it shifted focus to cancer drug development. Shares of Covid-19 vaccine makers Moderna fell 1.9% while Novavax dropped 2.2%.
The biggest boost to the consumer discretionary sector was Amazon.com, whose shares gained 1.3%.
Adding to this was Tesla, which gained 2.5% after confirming to Reuters that it will raise the price of its China-produced Model Y vehicles by 5,000 yuan (RM3,290) from April 1.
Also in the consumer sector, Chipotle Mexican Grill shares climbed 3.5% after the company said its board had approved a 50-for-1 split of common stock.
Equinix shares eased 2.3% after Hindenburg Research said it has taken a short position in the data center operator. – Reuters
