Wall Street's S&P 500 hits fresh peak after Fed

By Michael Connor
Television screen displays Federal Reserve Chair Yellen's news conference as traders work on the floor of the New York Stock Exchange
A television screen displays Federal Reserve Chair Janet Yellen's news conference as traders work on the floor of the New York Stock Exchange June 18, 2014. REUTERS/Brendan McDermid

By Michael Connor

NEW YORK (Reuters) - Wall Street stocks jumped on Wednesday, taking the S&P 500 index of top companies to an all-time record after the Federal Reserve promised to keep in place low interest-rate policies and forecast the world's biggest economy would expand moderately.

Treasuries prices also gained, as the dollar added to mild losses posted ahead of a Fed policy statement and a news conference by U.S. central bank chief Janet Yellen, who calmed investor worries she might adopt a more hawkish tone on monetary policy.

"Steady as she goes, with respect to policy," said Kim Rupert, managing director at Action Economics in San Francisco. "A lot of the doves want to make sure the recovery is for real and is in place and (are) still maintaining a very accommodative posture."

Global markets worried that Yellen and the Fed might move more quickly than anticipated toward unwinding a low interest rate regime begun in 2008. But those worries appear to have dissipated.

The S&P 500 gained 14.99 points or 0.77 percent, to finish at 1,956.98, eclipsing the previous record set on June 9.The Dow Jones industrial average rose 98.13 points, or 0.58 percent, to end at 16,906.62. The Nasdaq Composite added 25.60 points or 0.59 percent, to 4,362.84 as U.S. equities extended a three-day winning streak

Among the biggest gainers was FedEx Corp, which rose 6.2 percent to $148.95 after hitting an all-time intraday high of $149.34. Its gains helped push the Dow Jones Transportation average up 1.5 percent.

Treasury debt traders had been especially worried Yellen might turn toward hawkish policies.

“There were a lot of people that thought there would be a lot more mention of inflation there, that there would have been a more hawkish tone, but on balance it came out fairly dovish,” said Aaron Kohli, an interest rate strategist at BNP Paribas in New York.

Benchmark 10-year notes gained 17/32 in price to yield 2.59 percent. Five-year notes rose 11/32 in price to yield 1.67 percent.

In currency trading, the dollar retreated against the euro and the yen on the Fed's still-dovish tone, a cut in its forecast for economic growth and a hint long-term rates could be lower than previously indicated.

The dollar fell 0.22 percent against the yen at 101.93 yen , while the euro was up 0.35 percent at $1.3592 . The dollar index reflecting the greenback against six other currencies dipped 0.3 percent to 80.387 .

The risk of a faster U.S. policy tightening was enough to keep European stocks from hitting new multi-year highs. The FTSEurofirst 300 index of top European shares slipped 0.02 percent at 1,387.44. A measure of world stock markets added 0.48 percent.

Brent crude oil rose 86 cents to a nine-month high at $114.31 as a strike by Sunni militants on a refinery near Baghdad stoked worries about oil exports. U.S. crude fell 39 cents to settle at $105.97 a barrel, the lowest since June 11.

(Editing by Chizu Nomiyama, Leslie Adler and Dan Grebler)