Stocks were broadly higher on Wall Street on Wednesday afternoon after the Federal Reserve signaled it could start easing its extraordinary measures to support the economy later this year.
In a statement issued at 2 p.m. Eastern time, the central bank said it could start raising its benchmark interest rate sometime next year, earlier than it does. had considered three months ago.
The Fed also said it would likely start slowing the pace of its monthly bond purchases “soon” if the economy continues to improve. He bought bonds to help keep long-term interest rates low.
The S&P 500 was up 1.3% at 2:13 p.m. EST. It had only increased by 0.3% at the start. The other major indices also rose following the Fed’s statement. The Dow Jones Industrial Average rose 488 points, or 1.4%, to 34,405 and the Nasdaq rose 1.3%.
Gains in the S&P 500 were broad and could potentially break a four-day losing streak for the index, if they hold up. Over 90% of the stocks in the index rose. Banks and tech companies led the gains.
Small stocks have also increased. The Russell 2000 was up 1.6%.
The yield on the 10-year Treasury bill slipped to 1.30% from 1.32% just before the Fed’s statement was released. Crude oil prices rose 2.3%.
Netflix jumped 3.7% after the streaming entertainment service acquired Roald Dahl’s works, the late British author of famous children’s books such as “Charlie and the Chocolate Factory”.
Facebook fell 3.8% and tempered gains in communications stocks after the social network told advertisers in a blog post that it underestimated web conversions by users of Apple mobile devices by about 15% as a result of changes to Apple’s operating system.
FedEx fell 8.3%, biggest drop among S&P 500 stocks, after reporting significantly higher costs even as the demand for shipping increased. A wide range of industrial and other businesses have faced higher costs due to a mix of labor and supply chain issues.
Wall Street has tried to gauge how the slowing economic recovery will affect the Fed’s decision-making process. The wider market has been agitated as this issue persists amid growing cases of COVID-19 due to the highly contagious delta variant.
Investors also worried about heavily indebted Chinese real estate developers and the damage they could cause if they default and spill over into the markets. Evergrande, one of China’s largest private sector conglomerates, said it would make a payment due on Thursday, potentially allaying some of those concerns.
European markets were mostly up and Asian markets were mixed. The markets in South Korea and Hong Kong were closed for holidays.