Stocks Climb, Dollar Declines After Dovish Fed: Markets Wrap

(Bloomberg) — Stocks climbed, while the dollar fell after the Federal Reserve signaled interest rates will remain low to bolster the recovery from a pandemic-induced recession. Treasuries fluctuated.

The S&P 500 extended gains after the Fed left rates near zero and signaled it would hold them there through at least 2023. Chairman Jerome Powell said that while the economy has “picked up” from the second quarter, the central bank remains committed to using its full range of tools. Banks and energy companies led the advance in stocks, while tech shares underperformed. The Dow Jones Transportation Average, normally seen as proxy of economic performance, jumped to a record. Chevron joined a surge in oil.

Read: Fed Signals Rates Will Stay Near Zero for at Least Three Years

“The FOMC is holding course with its impressive display of monetary firepower,” said Jason Pride, chief investment officer of private wealth at Glenmede, referring to the Federal Open Market Committee. “While monetary policy itself cannot solve the underlying cause of this recession (i.e. the pandemic), it can prime the economy for a stronger, more durable recovery once the dust finally settles on this pandemic.”

The Organisation for Economic Co-operation and Development said the global slump won’t be as sharp as previously feared this year, though the recovery is losing pace and will need support for some time yet. The White House strongly signaled Wednesday that it is willing to increase its offer in talks with Democrats, and that Senate Republicans should go along in order to seal a stimulus deal in the next week to 10 days.

Top U.S. health officials offered conflicting estimates of when coronavirus vaccines will be widely available — with one saying that every American could be able to get a shot by the end of March.

These are some of the main moves in markets:

Stocks

The S&P 500 advanced 0.8% as of 2:40 p.m. New York time.The Stoxx Europe 600 Index climbed 0.6%.The MSCI Asia Pacific Index increased 0.6%.

Currencies

The Bloomberg Dollar Spot Index decreased 0.2%.The euro fell 0.2% to $1.1829.The Japanese yen appreciated 0.5% to 104.95 per dollar.

Bonds

The yield on 10-year Treasuries was little changed at 0.68%.Germany’s 10-year yield fell one basis point to -0.48%.Britain’s 10-year yield decreased one basis point to 0.211%.

Commodities

The Bloomberg Commodity Index gained 0.7%.West Texas Intermediate crude increased 4.5% to $40.01 a barrel.Gold strengthened 0.5% to $1,963.37 an ounce.

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