The stock market shook off previous losses and rebounded to new highs on Wednesday after the Federal Reserve said the economy was strong enough for the central bank to begin reducing the historical stimulus it has given the markets since the beginning Covid-19 pandemic.
All three major indices were in the red prior to the Fed announcement but turned positive on the news and closed on a record for the third day in a row: the Dow Jones Industrial Average rose 0.3% while the S&P 500 rose 0, Gained 7% and the Tech Heavier Nasdaq Composite increased 1%.
In a move widely anticipated by investors, the Federal Reserve announced Wednesday that it would be scaling back its $ 120 billion pandemic bond purchase program “in light of the advances in the economy.”
Unsurprisingly, the central bank left interest rates unchanged, but it also acknowledged that economic growth slowed in the third quarter due to supply chain constraints and inflation, which Fed chief Jerome Powell said is likely to continue until mid-2022.
Fed officials also stated their stance on inflation, which remains near the 30-year high, saying it is “temporarily expected”.
Lyft and CVS stocks rose on solid third-quarter results, while Zillow stocks fell over 20% after results fell below expectations and the company said it would end its home flipping business.