The market finished slightly lower on Wednesday after the Federal Reserve indicated that it would leave interest rates unchanged until 2022, while also warning of a long economic recovery from the coronavirus recession.
The Dow Jones Industrial Average fell 0.9%, over 250 points, on Wednesday, while the S&P 500 was down 0.5% and the tech-heavy Nasdaq Composite gained 0.7%.
The Federal Reserve concluded its two-day meeting on Wednesday by leaving interest rates unchanged near zero and indicating that they will stay there until 2022.
It also gave a grim update on the economy: The Central Bank forecasts a long recovery, with unemployment likely to remain high for many years.
The Fed, which has injected nearly $3 trillion into financial markets since late February, pledged to continue its unprecedented stimulus plan until the economy has weathered the coronavirus recession.
The Nasdaq climbed to a new record high on Wednesday, however, closing above 10,000 for the first time ever thanks to continued strength in tech stocks. Investors continued to rotate back into names like Amazon and Apple, which both hit new record highs again.
“A large shift is occurring as investors cycle out of value/cyclical stocks for a second day and pour money into growth,” according to Vital Knowledge founder Adam Crisafulli.
Stocks that would benefit from a reopening—including airlines, retailers and cruise operators—have all been moving lower recently, after having led the market rally in the past few weeks.
Bank stocks were especially hard-hit on Wednesday, plunging on the news that the Fed will keep interest rates low for a long time.
“We are not even thinking about thinking about raising rates,” Federal Reserve chairman Jerome Powell confirmed at his press conference. He added that while “there is great uncertainty about the future,” the central bank is strongly committed to doing “whatever we can, for as long as it takes” to help support the economy.
BIG NUMBER: 10,000.
With tech stocks making a comeback in recent days, the Nasdaq hit a new record high on Wednesday, closing above 10,000 for the first time ever. Shares of Amazon, Apple, Netflix, Microsoft and Google-parent Alphabet have all been soaring recently, boosting the index higher.
Stocks have continued to rally on optimism about reopening the economy and a faster than expected recovery from the coronavirus pandemic. The market has so far had a strong start to June, building on back-to-back monthly gains. The S&P 500 on Monday turned positive for 2020, fully recouping its losses from the coronavirus sell-off earlier this year. The index is now up more than 45% from its low point on March 23.