US economy

US stocks end higher as Fed flags no change to rates in 2020


US stocks closed within a whisker of record highs, buoyed on Wednesday by the Federal Reserve’s confidence in the labour market and the central bank’s projection interest rates would remain on hold through 2020.

The outlook helped steady investors’ nerves, which have been tested this week by concerns the US and China may struggle to agree a phase one trade deal that would prevent a new round of tariffs on Chinese imports being imposed on December 15.

The S&P 500 closed 0.3 per cent higher and less than five index points from Friday’s record of 3,145.91. The Nasdaq Composite added 0.4 per cent and the Dow Jones Industrial Average advanced 0.1 per cent.

The Fed kept interest rates unchanged at a range of 1.5 per cent to 1.75 per cent, as expected, and following cuts at the previous three meetings. The US central bank again pointed to a “strong” labour market and household spending, but showed a shift towards a more accommodative policy path over the next three years.

Government bonds strengthened as yields fell. The yield on the benchmark 10-year US Treasury was down 3.3 basis points at 1.7983 per cent, while that on the two-year, which is more sensitive to the Fed policy outlook, was down 3.5bp at 1.6174 per cent.

The dollar index, which tracks the buck against a weighted basket of global peers, was down 0.3 per cent at 97.112, an almost-five-month low.



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