Stocks brushed off a muted start on Wall Street and notched modest gains Wednesday after the Federal Reserve reaffirmed that it is prepared to cut interest rates if needed to shield the US economy from trade conflicts or other threats, the AP reports. In a widely expected move, the central bank's policymakers decided to leave the Fed's benchmark interest rate unchanged. Still, by signaling the possibility of lower rates, the Fed reassured investors who have been worried that the trade war between Washington and Beijing could weigh on global economic growth, and by extension, corporate profits. The reaction to the Fed's midafternoon statement was more pronounced in the bond market, where the yield on the 10-year Treasury note slid to 2.03%, its lowest level since November 2016.
The move signals that bond traders see an increased likelihood that the Fed will lower rates. Investors are betting on at least one interest rate cut this year, possibly as early as July. "The story of the last six months is equities are comforted when they believe that the Fed is going to be supportive and going to provide offsets to some of the policy uncertainties that are out there," said Willie Delwiche, investment strategist at Baird. The latest gain extended the market's winning streak to a third day, adding to a June rebound in stocks after a dismal sell-off in May. The S&P 500 rose 8.71 points, or 0.3%, to 2,926.46. The broad market index is within striking range of its all-time high, set on April 30. The Dow Jones Industrial Average gained 38.46 points, or 0.1%, to 26,504. The Nasdaq composite added 33.44 points, or 0.4%, to 7,987.32.
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