Stocks gain, dollar falls, as Fed keeps rates near zero
|07/29/2020 | 01:01pm|
U.S. stocks gained further and the U.S. dollar fell on Wednesday as investors reacted to the U.S. Federal Reserve's decision to keep interest rates at ultra-low levels.
The Fed repeated a pledge to use its "full range of tools" to support the U.S. economy and keep interest rates near zero for as long as it takes to recover from the fallout from the coronavirus outbreak, saying the path of the economy will depend significantly on the course of the virus.
"This was pretty much as expected," said Stan Shipley, a macro research analyst with Evercore ISI in New York, noting the Fed had already done a lot. "The key statement will be in September when they give some forward guidance."
Investors must now watch to see if Congress can agree on fresh economic support measures. U.S. President Donald Trump said on Wednesday that his administration and Democrats in Congress were still far apart in their efforts to agree on a coronavirus relief bill.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.93% following slight losses in Europe and broader declines in Asia.
In afternoon trading on Wall Street, the Dow Jones Industrial Average rose 167.57 points, or 0.64%, to 26,546.85, the S&P 500 gained 41.4 points, or 1.29%, to 3,259.84 and the Nasdaq Composite added 160.88 points, or 1.55%, to 10,562.97.
Among U.S. stocks to advance were Starbucks Corp, which saw its business "steadily recovering," and Advanced Micro Devices, which surged after it raised its revenue forecast. Boeing shares fell after a bigger-than-expected loss.
Deaths from the novel coronavirus in the United States registered their biggest one-day increase since May on Tuesday, with this month's spike in infections having forced some states to make a U-turn on reopening their economies.
Asia and Europe have also been hit by new surges in novel coronavirus infections, with several countries imposing new restrictions and Britain imposing 14-day quarantines on travelers from Spain.
Traditional safe haven assets were mixed.
After a pause, gold prices resumed their climb and added 0.9% to $1,975.97 an ounce.
Benchmark U.S. Treasury 10-year notes last rose 2/32 in price to yield 0.587%, from 0.581% late on Tuesday.
The dollar index <=USD> fell 0.59% amid inflation fears, with the euro up 0.72% to $1.1798.
Oil prices climbed after a surprise drop in U.S. crude inventories was enough to offset concerns about U.S. fuel demand, though concerns about the record increases in COVID-19 infections kept gains in check.
U.S. crude rose 0.46% to $41.23 per barrel and Brent was at $43.67, up 1.04% on the day.
By David Randall and Lawrence Delevingne