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Major US indices rise, tech retreats after Fed policy shift

Major US indices rise, tech retreats after Fed policy shift

The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City on Mar 9, 2020. (Photo: REUTERS/Carlo Allegri)

WASHINGTON: Wall Street ended in a mixed fashion on Thursday (Aug 27) following the Federal Reserve's major inflation policy change, with the S&P posting a new record but the Nasdaq retreating.

The benchmark Dow Jones Industrial Average rose 0.6 per cent at the close to 28,492.27, while the broad-based S&P 500 posted its fifth straight record rising 0.2 per cent to 3,484.55.

But the Nasdaq snapped its streak of five back-to-back records retreating 0.4 per cent to finish at 11,926.16.

The day's major development was the Fed's decision to lessen the priority on fighting inflation in favour of maximising employment for low-income families.

The move will not have any effect in the near-term because borrowing rates are at near-zero as the economy weathers the coronavirus downturn.

But when economy begins to expand, the decision indicates the central bank will keep the policy interest rate low for longer - and that is what Wall Street wanted to hear, said Maris Ogg of Tower Bridge Advisors.

"The Fed made it pretty clear: the fiscal side is pretty much a mess, I want everyone to know we got your back. That was the message conveyed, and the market took it well," she said.

The announcement outweighed Labor Department data showing one million people filing new jobless benefit claims in the latest week, an indication of widespread joblessness as the United States struggle with the world's worst COVID-19 outbreak.

Abbott Laboratories hit a 52-week high after the White House announced President Donald Trump would soon announce a deal to buy 150 million rapid coronavirus tests from the US company.

Banking stocks also climbed, no doubt buoyed by the promise of continuing low interest rates. Citigroup rose 1.7 per cent, JPMorgan Chase 3.3 per cent and Bank of America 1.9 per cent.

Source: AFP/ec

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