Wall Street closes slightly higher after Fed minutes affirm low rates for longer

April 8, 2021 - 2 weeks ago
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All three major U.S. stock indexes seesawed throughout Wednesday’s session as the U.S. Federal Reserve’s latest policy meeting reaffirmed their commitment to supporting the economic recovery.

U.S. Treasury yields were mostly lower on Wednesday after the Federal Reserve struck a dovish tone in its March policy meeting minutes, reinforcing expectations that interest rates will remain low for some time.

The yield on the benchmark 10-year U.S. Treasury note moved higher late in the session yet remained below a 14-month high of 1.776% hit on March 30, after settling on Wednesday at 1.67%.

The recent pullback in yields has helped growth names and lifted technology and communication services stocks as the best performing sectors on the day.

The gains were minor and short-lived on Wall Street as many market participants question whether the Fed will hold off so long on a rate hike.

Despite an improving U.S. economy and labour market, Fed officials said they expect it will be “some time” before any tapering of the central bank’s monthly asset purchases program takes place or before benchmark interest rates are lifted from today’s near-zero levels, according to Fed minutes.

The U.S. Federal Reserve data released also indicated that the U.S. consumer borrowing also picked up in February, and households started to use their credit cards again.

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial rose +16.02 points, or +0.05%, to 33,446.26, its second-highest finish ever.

The broad-based Standard & Poor’s 500 Index eked out a +6.01 points, or 0.15% gain, to 4,079.95, while the rich-tech Nasdaq Composite dropped -9.54 points, or -0.07%, to 13,688.84, booking its second day in a row of losses.

The U.S. economy has rebounded faster than most have expected due largely to President Joe Biden’s landmark $1.9 trillion stimulus package paired with steady vaccine rollout throughout the country, which has helped the labour, manufacturing, and travel sectors recover.

The President on Tuesday moved up the timeline for all American adults to be eligible for a COVID-19 vaccine to April 19 from May 1.

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