Stock Market Today: Fed's Smooth Talking Sends Dow Above 33K
The Federal Reserve struck the right tone with Wall Street on Wednesday, signaling higher growth expectations but staying pat on its benchmark rate.
Federal Reserve Chair Jerome Powell and the rest of the U.S. central bank deftly walked the expectations tightrope in their post-FOMC meeting commentary Wednesday – at least, that's what the afternoon jump in stocks indicated.
The Fed upgraded its expectations for 2021 GDP growth to 6.5%, from 4.2% back in December – while also lifting its projections for core inflation, which it now sees hitting 2.2% (up from its previous forecast of 1.8%).
But the Fed's interest-rate policy remained unchanged, and while a few members signaled that interest-rate hikes might come sooner than they believed a few months ago, the mean "dot plot" still indicates no changes in the benchmark rate until 2023.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"As expected, the Fed made no changes to the Fed funds rate and the bond buying program. That was the easy part," says Anu Gaggar, senior global investment analyst for Commonwealth Financial Network. "Many on the Street were looking for a hawkish Fed, in so far as dots at least. With the 2023 median plot still hugging the floor, stocks and bonds are rising again,"
"This is like a Goldilocks market – strong economic growth, moderately higher inflation, rebounding earnings, and very easy monetary conditions."
"The Fed gave the stock market what it wanted to hear," adds Ryan Detrick, chief market strategist for LPL Financial. "The economy is quickly improving, yet they don't plan on removing the punchbowl anytime soon and rates will likely stay low for the intermediate future."
All of the major indices flipped from earlier-day losses to gains by the close. The Dow Jones Industrial Average eclipsed 33,000 for the first time, climbing 0.6% to a record 33,015 thanks to moves higher Dow (DOW, +4.5%), Boeing (BA, +3.3%) and Caterpillar (CAT, +3.2%).
The S&P 500 also set a new high, up 0.3% to 3,974. And the Nasdaq Composite improved by 0.4% to 13,525.
Other action in the stock market today:
- The Russell 2000 was tops among the major indices, gaining 0.7% to 2,336.
- U.S. crude oil futures declined for a fourth consecutive session, off 0.3% to $64.60 per barrel.
- Gold futures cheered the Fed's announcement, gaining 0.6% to $1,741.00.
- Bitcoin prices rebounded with the market, jumping 3.6% to $57,756. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Is "Infrastructure Week" Nigh?
We mentioned yesterday that the market's biggest risk is shifting from COVID-19 to inflation. But what about its next driver? President Joe Biden's $1.9 trillion stimulus package is technically in the market's rear-view mirror, after all, even if stimulus checks are just starting to go out.
There are certainly plays to be made in the economic recovery and the reflation trade, but many analysts are increasingly focused on the possibility of a long-awaited infrastructure bill.
"Expect lawmakers to quickly turn to a recovery/infrastructure package with the goal of having a draft bill around late spring," Raymond James analysts wrote earlier this month. "President Biden held another bipartisan meeting with lawmakers ... and House Democrats introduced new climate legislation, portions of which (such as hundreds of billions of dollars for clean energy transitions and a national green bank) are likely to be key parts of Biden's infrastructure plan."
Pay special attention to that last part. While an initiative targeting things such as America's aging roads and bridges would surely help traditional materials and industrial plays, your world of infrastructure plays to target might need to include green-energy and even telecommunications-focused plays.
Read on as we explore 12 of the best infrastructure stocks to benefit from a bipartisan infrastructure plan from Washington, including conventional and outside-the-box selections alike.
Disclaimer
Kyle Woodley was long BA as of this writing.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Kyle Woodley is the Editor-in-Chief of WealthUp, a site dedicated to improving the personal finances and financial literacy of people of all ages. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.
Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.
You can check out his thoughts on the markets (and more) at @KyleWoodley.
-
Holiday Office Party Taxes: Know Before You Go
Tax Tips The IRS could tax your gifts from Christmas raffles, Secret Santa, and White Elephant. Here’s how.
By Kate Schubel Published
-
2025 Tax Reform: Will the SALT Deduction Cap Be Repealed?
Tax Deductions Some lawmakers say it’s time to end the $10,000 cap on state and local tax deductions.
By Kelley R. Taylor Published
-
Why Is Warren Buffett Selling So Much Stock?
Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
By Dan Burrows Published
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have Today
Google parent Alphabet has been a market-beating machine for ages.
By Dan Burrows Published
-
Stock Market Today: Stocks Pause but Nvidia Hits New All-Time Highs
The major equity indexes were mostly mixed on Monday, but Nvidia hit yet another new all-time high.
By David Dittman Published
-
Stock Market Today: UnitedHealth Selloff Drags on Dow
While the main indexes ended in the red, Walgreens Boots Alliance had its best day since 2008.
By Karee Venema Published
-
Boeing Looks to Raise Up to $25 Billion as Cash Woes Swirl
Boeing stock is higher Tuesday after the aerospace giant filed to raise as much as $25 billion and entered a credit agreement worth $10 billion.
By Joey Solitro Published
-
Stock Market Today: Stocks at Record Highs as Earnings Season Ramps Up
Markets continued where they left off last week amid rising optimism over corporate profits.
By Dan Burrows Published
-
Why Boeing Is Considering a Potential $10 Billion Stock Sale
Boeing is reportedly considering issuing stock to shore up its cash reserves. Here's what you need to know.
By Joey Solitro Published
-
Stock Market Today: Stocks Rise as Fed Rate Cuts Near
The main indexes closed out the day and week notably higher as excitement swirls ahead of next week's rate cut.
By Karee Venema Published