The S&P 500 wind up around the flat line on Wednesday after the Federal Reserve left interest rates unchanged in its latest game plan decision and hinted that it would keep easy monetary policy where it is for some time despite a heartening economy and rising inflation.
The S&P 500 dipped 0.08% to 4,183.18, despite touching an intraday record earlier in the seating. The Dow Jones Industrial Average shed 164 points to close at 33,820.38, dragged down by a 7.2% drop in Amgen’s domestic on disappointing earnings. The Nasdaq Composite traded lower by 0.28% to 14,051.03.
The Fed wrapped up its two-day policy meeting on Wednesday, where the significant bank left rates near zero. It upgraded its assessment of the economy and acknowledged inflation was rising.
“Amid forward movement on vaccinations and strong policy support, indicators of economic activity and employment have strengthened,” the Fed said in a statement.
“With inflation competition persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some heyday so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Board expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” the committee added.
The S&P 500 traded to its treble of the day after Fed Chairman Jerome Powell said at a press conference that it would likely take “some sometime” before the Fed’s objectives are achieved. Powell also said it is not time yet to begin talking about tapering the Fed’s monthly asset buys.
Stocks traded off those highs, however, when Powell acknowledged that some asset prices may be elaborate and that there may be some frothiness in equity markets.
The small-cap benchmark Russell 2000 was the relative outperformer on Wednesday, succumb to about 0.1%.
Boeing lost nearly 3% after posting its sixth straight quarterly loss, which also weighed on the Dow.
Google well-spring Alphabet reported better-than-expected earnings after the bell on Tuesday, sending shares of the tech giant up 3%. Alphabet saw its returns grow 34% from a year ago.
Meanwhile, Microsoft shares dipped 2.8% even after the company excelled analyst estimates. Microsoft had its largest revenue growth since 2018, thanks in part to gains in PC sales culminating from coronavirus-driven shortages last year.
Technology darlings Apple and Facebook both report earnings on Wednesday after the bell.
“Innumerable FAANGs are reporting this week and the stock market may wait until some of these key reports are out before deciding on its next important direction,” said Jim Paulsen, chief investment strategist at the Leuthold Group.
Elsewhere, President Joe Biden is set to unveil newer on Wednesday a $1.8 trillion plan in new spending and tax credits geared toward helping families. The Biden administration’s new fork out plan would hike the top income tax rate to 39.6% for the wealthiest Americans and raise taxes on capital gains to 39.6% for households spacing more than $1 million, according to senior administration officials. Stocks took a hit initially last week when examines of this tax hike began to surface.
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