On Wednesday, Wall Street’s primary stock indices achieved record highs following the Federal Reserve’s decision to maintain borrowing costs unchanged, which alleviated investor concerns. The Dow Jones Industrial Average surged by 401.37 points, or 1%, reaching a record close of 39,512.13. Similarly, the S&P 500 rose by 0.9%, surpassing the 5,200 mark for the first time, while the Nasdaq surged by more than 200 points, or 1.2%.
The Fed’s policy statement acknowledged persistent inflation, yet it also updated its quarterly economic projections, anticipating a growth rate of 2.1% for the year, compared to the 1.4% projected in December. Additionally, it forecasted an unemployment rate of 4% by the end of the year, lower than the 4.1% previously anticipated.
Market gains were further bolstered by remarks from Fed Chair Jerome Powell during a press conference. Powell indicated that despite recent inflation data surpassing expectations, it hasn’t significantly altered the broader narrative of inflation gradually declining amidst some bumps along the way. Alex Coffey, senior trading strategist at TD Ameritrade, noted Powell’s commentary provided the market with a rationale to downplay the significance of the inflation data.
Although there was anticipation that Powell might adopt a more hawkish stance in response to recent economic indicators, his comments leaned towards a dovish outlook compared to recent market apprehensions. As a result, most of the S&P’s 11 major sectors experienced gains.
However, the healthcare sector faced pressure during the session, partly attributed to COVID-19 vaccine makers. BioNTech’s US-listed shares plummeted after reporting a decline in revenue and earnings for 2023, as the company shifted focus towards cancer drug development. Similarly, shares of Moderna and Novavax, both involved in COVID-19 vaccine production, experienced declines.
Conversely, Tesla’s consumer discretionary sector received a boost after confirming plans to increase the price of its China-produced Model Y vehicles by 5,000 yuan ($694.55) starting April 1.
In other news, Equinix shares dipped after Hindenburg Research disclosed a short position in the data center operator. Conversely, Chipotle Mexican Grill shares surged after announcing a 50-for-1 split of its common stock, further contributing to the positive sentiment in the market.