U.S. equity markets rallied after the Federal Reserve enacted its plan to keep interest rates low through at least 2023 to support the economy as it normalizes following the sharpest economic slowdown of the post-World War II era.
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The Dow Jones Industrial Average gained 290 points, or 1.04% while the S&P 500 and the Nasdaq Composite were higher by 0.61% and 0.17%, respectively.
|I:DJI||DOW JONES AVERAGES||28121.79||+126.19||+0.45%|
|I:COMP||NASDAQ COMPOSITE INDEX||11103.149271||-87.17||-0.78%|
The Federal Reserve kept its benchmark interest rate between 0% and 0.25% and said inflation would be allowed to overshoot the central bank’s 2% target “for some time.” The strategy was laid out last month at the Fed’s virtual Jackson Hole Symposium conference.
Financial stocks were among the leaders as traders digested the decision.
|BAC||BANK OF AMERICA CORP.||25.68||+0.41||+1.62%|
|JPM||JP MORGAN CHASE & CO.||99.86||+0.59||+0.59%|
Energy shares also gained as Hurricane Sally produced two feet of rain as it made landfall on the Alabama coast and worked its way through the Florida Panhandle.
The slow-moving storm caused West Texas Intermediate crude oil to climb $1.80 to $40.08 a barrel and RBOB gasoline to jump 4.15 cents to $1.1796 a gallon as a number of refineries were at risk of flooding and remaining idled.
|XOM||EXXON MOBIL CORPORATION||37.78||+1.51||+4.16%|
Meanwhile, mega-cap tech stocks that have driven the market, including Apple Inc., Amazon Inc. and Tesla Inc. lagged.
A CFIUS decision on Oracle Inc.’s “trusted tech partnership” with Chinese-owned social media app TikTok is imminent.
Nikola Corp. shares remained in focus as investors continued to digest a report from short-seller Hindenburg Research that accused the electric-truck maker of fraud. Nikola, which has called the claims “false and deceptive” is under investigation from the U.S. Securities and Exchange Commission.
Elsewhere, Eli Lily reported its COVID-19 antibody treatment’s mid-stage trial reduced the hospitalization rate for patients diagnosed with mild or moderate cases.
A law firm hired by the Eastman Kodak Co.’s board of directors said securities transactions made by CEO Jim Continenza upon learning about a $765 million government loan to aid a pivot into producing generic drug ingredients did not violate internal policies. The situation remains under investigation by the U.S. regulators and Congress.
|LLY||ELI LILLY & COMPANY||151.53||+1.56||+1.04%|
|KODK||EASTMAN KODAK CO.||8.41||+2.16||+34.56%|
Dow component Boeing Co. made a number of missteps in the certification of the 737 Max aircraft that lead to two deadly crashes, according to an 18-month long investigation conducted by a U.S. House panel.
Looking at earnings, FedEx Corp.’s quarterly profit rose 60% from a year ago to $4.87 a share, boosted by a surge in online shopping due to COVID-19. The parcel delivery service said it will raise shipping rates by 4.9% to 5.9%, beginning in January.
U.S. Treasurys were little changed with the yield on the 10-year note holding near 0.675%.
European markets were quiet with Britain’s FTSE off 0.44%, Germany’s DAX up 0.29% and France’s CAC higher by 0.13%.
In Asia, Japan’s Nikkei edged up 0.09% as Yoshihide Suga was elected the country’s prime minister. Elsewhere in the region, Hong Kong’s Hang Seng slipped 0.03% and China’s Shanghai Composite shed 0.36%.