US stocks moved sharply higher with the Nasdaq Composite and the Russell 200 closing at record highs just a day after the Federal Reserve indicated in its policy statement that it would move slower on hiking the interest rates.
The technology heavy Nasdaq Composite jumped 63.7 points or 1.3% to 5,132.57 points, topping its highest close since the dot com bubble. The index is now more than 24% higher on the day.
The Dow Jones Industrial Average advanced 180.71 points or 1% to close at 18,115 points with all 30 components of the blue-chip index trading in the black.
The S&P 500 index closed 20.80 or 1% higher at 2121.24 points with all ten key sectors trading higher on the day.
“It’s a pretty rosy scenario here,” Tom Mangan, who helps oversee about $6.4 billion as money manager at James Investment Research in Xenia, Ohio, told Bloomberg.
“The market has discounted a lot of bad things and in fact there are some really good things happening. As long as the Fed is dragging their feet in terms of going back to what might be called a normal level of liquidity, then they are providing momentum for the economy.”
The Federal Reserve said that it thought that the economy was robust enough to withstand a rate hike but trimmed its economic forecast for the year after a weaker than expected start to the year.
Fed chairwoman Janet Yellen, in her news conference after the statement, reiterated the central bank’s stand that they remained data dependent.
This move could prompt traders to focus more on the economic data in the coming months to try wager on the timing of the rate hike.
“Today’s markets are higher on a combination of the data and the Fed signaling that it will begin raising rates this year but at a shallower pace,” Jack Ablin, chief investment officer at BMO Private Bank in Chicago, told Reuters.
“I think investors are getting comfortable with the Fed’s plans and anyway the first hike will be mostly symbolic.”
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