Wall Street added to its gains on Thursday after the Federal Reserve’s move to raise interest rates without stepping up its forecasts for future rate rises this year.
A day after clocking in its best day in two weeks, the S&P 500 opened 0.1 per cent stronger at 2,387.59 while the Dow Jones Industrial Index tacked on 0.2 per cent to 20,985.15 and the Nasdaq Composite climbed 0.2 per cent to 5,908.40.
The gains come after the Fed stuck to its December forecasts and indicated it will raise rates only two more times this year. Some in the market had been bracing for a more hawkish outlook and the possibility of three more hikes this year.
US stocks could benefit from a Goldilocks scenario, where the Fed would raise rates enough to help fatten the bottom line for big banks, but not fast enough to stymie economic growth.
Indeed, Thursday’s push higher was led by bank stocks, with the S&P 500 financials index up 0.5 per cent. Utilities and healthcare, often favoured for their dividends, both fell 0.5 per cent as higher US rates take the shine off those sectors.
US government bonds meanwhile gave up some of their gains from yesterday. Yields on the 10-year Treasury rose 2.5 basis points to 2.520 per cent, while the more policy sensitive 2-year note yield climbed 2.1bps to 1.32 per cent.
The dollar remained under pressure. The DXY index fell 0.3 per cent, adding to yesterday’s 0.9 per cent decline.