The S&P 500 and Dow hit records Wednesday riding a sharp intraday reversal in tech stocks after bond yields were given their marching orders as the Federal Reserve said it was no hurry to lift rates despite signs the recovery is taking shape.
The Dow Jones Industrial Average rose 0.58%, or 190 points, to a closing record of 33,015.397, and the S&P 500 rose 0.30% to close at a record fo 3,974.71. The Nasdaq Composite was up 0.40%, but had been down more than 1% intraday.
The Federal Open Market Committee left its benchmark rate unchanged in the range of 0% to 0.25% and said it would continue its $120 billion monthly bond purchases.
The central bank's policymakers appear in no hurry to hike rates, continuing to back them at near-zero through 2023 despite hiking their outlook on growth.
The U.S. 10-year Treasury yield retreated from 13-month high following the decision, helping tech cut losses and turn positive.
FAANG, which had led the decline in tech earlier in the day, ended well above session lows. Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB), Netflix (NASDAQ:NFLX) were higher while Apple (NASDAQ:AAPL) and Google-parent Alphabet (NASDAQ:GOOGL) ended below the flatline.
Ahead of the Fed decision, some had said the recent hit to highly-valued growth names from rising yields was overdone as rates are normalizing amid an improving economic backdrop.
"The market's reaction, especially to the highly valued names, and the expectations for inflation moving forward are currently overdone right now," David Wagner, a portfolio manager at Aptus Capital Advisors, said in an interview with Investing.com.
"This [the rise in bond yields] is just a normalization in rates … if you go back to previous cycles, rates tend to average about 200 basis points off the bottom on the 10-year Treasury yields in the first year and that's really just what we're seeing now," Wagner added.
Cyclical stocks – those that move in tandem with economy – also played a role in the broader market rally.
Industrials were pushed higher by General Electric (NYSE:GE) and Caterpillar (NYSE:CAT), with the latter up more than 3%.
Energy jumped as oil prices pared some losses on data showing a smaller-than-expected build in U.S. crude inventories and an unexpected climb in product stockpiles. Gasoline inventories rose 472,000 as the recent lull in refinery activity appears to be on the road to normalizing.
In another sign that the reopening is gathering pace, Walt Disney Company (NYSE:DIS) said it will open its flagship Disneyland theme park on Apr. 30. Its shares were up 0.5%.