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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
Kyle Woodley was long BA as of this writing.
-
Markets Are Quiet Ahead of Fed Day: Stock Market TodayInvestors, traders and speculators appear to be on hold amid an unusually fraught Fed meeting.
-
Quiz: Test Your Knowledge of the OBBB, Wealth Transfer and Early RetirementQuiz The financial professionals who contribute to Kiplinger's Adviser Intel recently wrote about the OBBB's impact on retirement, how to ensure your wealth passes to your family and early retirement questions.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
Stocks End Strong Month on a Down Note: Stock Market TodayThere was likely a bit of profit-taking ahead of a historically weak September.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
-
President Trump Makes Markets Move Again: Stock Market TodayThe White House is moving ahead with plans to reshape the Federal Reserve and to buy shares in more sectors and stocks.
-
Dow Rips 846 Points to New All-Time High: Stock Market TodayFed Chair Jerome Powell seems ready to cut interest rates in the fall but will still rely on incoming economic data about inflation and employment.
-
Nasdaq Ends the Week at a New High: Stock Market TodayThe S&P 500 came within a hair of a new high, while the Dow Jones Industrial Average still has yet to hit a fresh peak in 2025.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
