Wall Street’s main indexes rose on Thursday as Federal Reserve Chair Jerome Powell rolled out the U.S. central bank’s aggressive new strategy to restore the United States to full employment and lift inflation back to healthier levels.
Under the new approach, the Fed will seek to achieve inflation averaging 2%, offsetting below-2% periods with higher inflation “for some time,” and to ensure employment doesn’t fall short of its maximum level.
“This market these days is all driven by expectations for more or less Fed liquidity,” said Ernesto Ramos, managing director of active equities at BMO Global Asset Management in Chicago.
“When you have a liquidity driven market, people are not buying stocks according to what the underlying pillars of growth are. Therefore, when that liquidity gets taken away, the whole house of cards collapses.”
The S&P 500 and the Nasdaq have risen to new highs, largely driven by a tech-related rally at a time when the U.S. economy is struggling with its worst downturn since the Great Depression.
Data on Thursday showed weekly jobless claims hovered around 1 million last week, suggesting the labor market recovery was stalling.
At 9:58 a.m. ET, the Dow Jones Industrial Average was up 259.60 points, or 0.92%, at 28,591.52, turning positive on the year for the first time since a coronavirus-driven crash in March.
The S&P 500 was up 16.15 points, or 0.46%, at 3,494.88 and the Nasdaq Composite was up 14.89 points, or 0.13%, at 11,679.95.
Economically-sensitive financials jumped the most among the 11 major S&P sectors while tech-focused sectors eased.
Boeing Co rose 5% after the European Union Aviation Safety Agency (EASA) announced plans to begin flight tests of its 737 MAX plane, a move viewed as a key milestone toward its return to service.
Abbott Laboratories surged 7.8% after the medical device maker won U.S. marketing authorization for a $5 rapid COVID-19 portable antigen test.
Cosmetics maker Coty Inc shed 6.9% after posting a bigger-than-expected quarterly loss as demand for its beauty products took a hit from the closure of stores and parlors.
Advancing issues outnumbered decliners 2.03-to-1 on the NYSE and 1.20-to-1 on the Nasdaq.
The S&P index recorded 32 new 52-week highs and no new low, while the Nasdaq recorded 44 new highs and eight new lows.
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