The Dow Jones Industrial Average eked out a small gain on Wednesday after the Federal Reserve indicated it will keep interest rates lower over the next few years. However, the broader market S&P 500 struggled as shares of major tech companies declined.
The 30-stock Dow closed 36.78 points higher, or 0.1%, at 28,032.38. The S&P 500, meanwhile, slid 0.5% to 3,385.49. The tech-heavy Nasdaq Composite dropped 1.3% to 11,050.47. Both the Dow and S&P 500 hit their session highs after the Fed's announcement was released, but they quickly gave back those gains.
Apple dropped nearly 3%. Facebook ended the day down 3.3% and Amazon slid 2.5%. Netflix also fell more than 2%. Alphabet and Microsoft each closed more than 1% lower. A 1.4% gain in Goldman Sachs helped the Dow close positive for the session.
Members of the Fed's policymaking committee indicated the overnight rate could stay near zero through 2023 in order to achieve its 2% inflation goal. "With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time," the Federal Open Market Committee said in a statement.
"How 'average inflation targeting' is actually implemented over the next few years remains to be seen, but this afternoon's statement makes it clear that the FOMC does not believe that any significant tightening can be considered during the next 24-30 months at least, which as financial markets are concerned is 'forever,'" said Michael Shaoul, chairman and CEO of Marketfield Asset Management.
Fed Chairman Jerome Powell reiterated the central bank's approach, telling reporters in a news conference that easy monetary policy will remain in place "until these outcomes, including maximum employment, are achieved."
He added: "With regard to interest rates, we now indicate that we expect it will be appropriate to maintain the current zero to 0.25% target range for the federal funds rates until labor market conditions have reached levels consistent with the committee's assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time."
The chairman also said certain areas of the economy will continue to struggle without further fiscal aid. That comment came after White House chief of staff Mark Meadows said he was optimistic about Democrats and Republicans reaching a coronavirus stimulus deal. President Donald Trump also signaled in a tweet that he would back a bigger package.
Republicans and Democrats have struggled to reach a deal on further stimulus, dwindling hopes of an agreement being struck before the U.S. presidential election in November.
"They're in this for the long game," said Tom Hainlin, global investment strategist at Ascent Private Capital Management. "They've been looking at the unemployment data and they know what they can do, but they can't supplement fiscal policy."
In corporate news, one of the hottest initial public offerings of 2020 opened for trading on Wednesday. Data storage software company Snowflake surged more than 100% in its public-market debut. The IPO was priced at $120 per share.
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