Stocks were broadly higher on Wall Street Wednesday afternoon after the Federal Reserve signaled it may begin easing its extraordinary support measures for the economy later this year.
In a statement issued at 2 p.m. Eastern, the central bank said it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago.
The Fed also said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. It's been buying the bonds to help keep long-term interest rates low.
The S&P 500 was up 1.3% as of 2:13 p.m. Eastern. It had been up only 0.3% in the early going. The other major indexes also rose following the Fed statement. The Dow Jones Industrial Average rose 488 points, or 1.4%, to 34,405 and the Nasdaq rose 1.3%.
Gains within the S&P 500 were broad and could potentially break a four-day losing streak for the index, if they hold. More than 90% of stocks in the index rose. Banks and technology companies led the gains.
Smaller stocks also rose. The Russell 2000 was up 1.6%.
The yield on the 10-year Treasury note slipped to 1.30% from 1.32% just before the Fed statement was released. Crude oil prices rose 2.3%.
Netflix jumped 3.7% after the streaming entertainment service acquired the works of Roald Dahl, the late British author of celebrated children’s books such as “Charlie and the Chocolate Factory.”
Facebook fell 3.8% and tempered gains for communications stocks after the social network told advertisers in a blog post that it has been underreporting web conversions by Apple mobile device users by roughly 15% following changes to Apple's operating system.
FedEx slumped 8.3%, the biggest decline among S&P 500 stocks, after it reported sharply higher costs even as demand for shipping increased. A wide range of industrial and other companies have been dealing with higher costs because of a mix of labor and supply chain problems.
Wall Street has been trying to gauge how the slowdown in the economic recovery will affect the Fed's decision-making process. The broader market has been choppy as that question lingers amid rising cases of COVID-19 because of the highly contagious delta variant.
Investors have also been concerned about heavily indebted Chinese real estate developers and the damage they could do if they default and send ripple effects through markets. Evergrande, one of China’s biggest private sector conglomerates, said it will make a payment due Thursday, potentially easing some of those concerns.
European markets were mostly higher and Asian markets were mixed. Markets in South Korea and Hong Kong were closed for holidays.
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