A stronger economic forecast from the Fed drove the Dow and S&P 500 to record highs Wednesday. The central bank ramped up its growth outlook this year to 6.5% but said it would keep interest rates close to zero for years to come.
Stocks extended their gains after Fed Chair Jerome Powell said at a news conference it’s too early to discuss tapering off measures.
Summit Place Financial Advisors President Liz Miller says the Fed is walking a fine line.
“I don’t think there’s anything different Powell can say to keep trying to explain what is a little bit of a yin-and-yang between expecting strong growth but then saying they don’t expect to raise rates. It’s a very contradictory statement than we’ve ever heard from our Fed in the past.”
Economically sensitive consumer cyclical, materials and industrial stocks led the rally, pushing the Dow up six-tenth percent, the S&P three-tenth percent. Amazon helped pull the Nasdaq up four-tenth percent.
Investors shrugged off data showing drops in housing starts and building permits last month, dismissing them as a blip due to severely cold weather.
McDonald’s was among the leading gainers on the Dow and S&P, rising nearly 2%. Deutsche Bank upgraded shares of the fast-food chain to “buy” from “hold” and raised its price target.
And Disney shares, which have doubled over the last 12-months as investors bid up cyclical stocks, added a half percent. The company said it’ll reopen two theme parks in California to a limited number of guests on April 30. They had been closed over a year because of the health crisis.