NEW YORK – Stocks closed broadly higher on Wall Street after the Federal Reserve said it will keep the accelerator floored on its aid for the economy. The S&P 500 climbed 1.2% Wednesday, its best day in two weeks. Major technology stocks continued to lead the market higher, as the CEOs of four of them faced tough questions in virtual testimony to Congress. Treasury yields held steady and gold reached another record high. The Fed said it will keep short-term interest rates at their record lows and expressed concern that the viral outbreak will act as a drag on the economy and hiring.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Stocks are holding on to their gains on Wall Street Wednesday after the Federal Reserve said it will keep the accelerator floored on its aid for the economy, and the S&P 500 is on pace for its best day in two weeks.
The benchmark index was 1% higher in afternoon trading, while Treasury yields held steady and gold touched another record high. The Dow Jones Industrial Average was up 97 points, or 0.4%, at 26,479 as of 2:15 p.m. Eastern time, and the Nasdaq composite was up 1.2%.
Stocks climbed from the start of the day’s trading, and carried on rising after the Fed said it will hold interest rates at their record lows. The Fed also said it will also continue buying about $120 billion in Treasury and mortgage bonds each month. That policy is aimed at injecting cash into financial markets and spurring borrowing and spending. A day before, the central bank said it would continue several lending programs through the end of the year to help support the economy.
Such aid, along with stimulus from Congress, helped launch the stock market’s turnaround in March. Congress is also locked in negotiations for more support for the economy, with $600 in weekly unemployment benefits about to expire. Democrats and Republicans seem to remain far apart in their proposals, but investors are still hopeful about a deal’s chances.
It’s also a frenetic week for profit reports from the biggest U.S. companies. Several reported results for the spring that topped Wall Street’s expectations, even though they were far below last year’s levels from before the pandemic. That’s been the general trend so far this earnings season, with 40% of companies in the S&P 500 having reported.
Advanced Micro Devices rose 12.5% for one of the market’s bigger gains after it reported an even stronger jump in profit from April through June than Wall Street expected. It also raised its forecast for revenue through 2020. It’s notable because many companies have been pulling their forecasts or declining to offer any given all the uncertainty in the economy created by the pandemic.
The chip maker helped tech stocks in the S&P 500 rise 1.1% as a group, and they once again led the index higher.
Starbucks gained 3.9% after it reported a loss for the spring that wasn't as bad as analysts were expecting. It also gave a forecast for the current quarter that envisions a profit, though it gave a wide range with the lower and upper ends bracketing analysts' expectations.
L Brands, the parent company of Victoria's Secret, soared 33.8% for the biggest gain in the S&P 500 after it laid out plans to slash its annual costs by $400 million, including through laying off workers. The stock had been struggling for years before turning higher in the spring, and analysts say the cost cuts should help bolster the company's profitability.
Eastman Kodak's stock was on track to more than triple for the second straight day after the company won a $765 million government loan to launch a new business unit making pharmaceutical components. It surged 369.8% to $37.30, up from $2.62 on Monday.
Big technology CEOs, meanwhile, were testifying at a House of Representatives subcommittee hearing on whether they’ve grown too big and harm competition.
Amazon, Apple, Facebook and Google’s parent company have been some of the market’s strongest stocks through the pandemic, much as they’ve been for the last several years, on investors’ expectations that they can continue to grow almost regardless of what the economy does.
Their stocks have grown so valuable that they can sway the S&P 500 and other indexes almost by themselves. Those four, plus Microsoft, account for nearly 22% of the S&P 500’s total value.
The big tech-oriented stocks have had a few stumbles in recent weeks, but they remain far ahead of the rest of the market. Amazon added 0.7% Wednesday, Apple rose 1%, Facebook gained 0.6% and the Class A shares of Alphabet were up 1%.
The yield on the 10-year Treasury held steady at 0.58%.
Gold extended its record run and rose 0.4% to settle at $1,953.40 per ounce after touching $1,960.00 earlier in the morning.
Benchmark U.S. crude rose 0.4% to $41.21 per barrel. Brent crude, the international standard, gained 1% to $44.03 per barrel.
Overseas stock markets were mixed. The Nikkei 225 in Tokyo lost 1.1%, but stocks in Shanghai rose 2.1%. South Korea’s Kospi added 0.3%, and Hong Kong’s Hang Seng rose 0.4%.
Germany’s DAX lost 0.1%, and France’s CAC 40 rose 0.6%. The FTSE 100 in London was close to flat.