Stocks ended a choppy session mostly higher Thursday, with the S&P 500 index notching another record finish, after Federal Reserve Chairman Jerome Powell said policy makers would no longer pre-emptively hike interest rates to stave off inflation.
What did major benchmarks do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.10% rose 160.35 points, or 0.6%, to close at 28,492.27, after trading as high as 28,633.85. The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.04% ended with a gain of 5.82 points, or 0.2%, at 3,484.55. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -2.55% , which closed at a record on Wednesday, fell 39.72 points, or 0.3%, to close at 11,625.34, after hitting an all-time intraday high of 11,730.01.
What drove the market?
Trade in financial markets saw relatively big swings Thursday as Powell detailed the results of the central bank’s two-year long policy review. The Fed chief outlined a framework that would allow inflation to run hotter than 2% a year after periods in which it has run below that target — as it has for most of the period since the financial crisis in 2008.
Powell’s announcement briefly helped to bolster risk asset prices, as it underlined the central bank’s willingness to keep interest rates at rock-bottom for an extended period, but investors are still assessing the long-term implications of the actions.
“Fed Chair Powell put investors on roller-coaster ride after unveiling a new policy framework of average inflation targeting, cementing the ‘Powell put’ of keeping interest rates anchored for years,” wrote Edward Moya, senior market analyst at Oanda in a daily note. The Powell put is a reference to the idea that the central bank would take steps to soothe markets in the event of a violent downturn much as a put option might for stocks.
It was also a busy day on the U.S. economic calendar. First-time applications for unemployment benefits came in at 1.01 million in the week ended Aug. 22, close to forecasts from MarketWatch-polled economists. Meanwhile, continuing claims fell slightly to 14.5 million.
A revised reading of second-quarter gross domestic product showed the economy contracted at a 31.7% annualized pace.
Which companies were in focus?
Shares of Abbott Laboratories /zigman2/quotes/203724446/composite ABT -0.0084% rose 7.8% after the U.S. Food and Drug Administration granted emergency-use authorization for the company’s $5 rapid-response COVID-19 antigen test.
Coty Inc. /zigman2/quotes/208645074/composite COTY -12.96% shares fell more than 8% after the cosmetics company reported weaker-than-expected earnings for its fiscal fourth quarter as the COVID-19 pandemic crushed sales.