S&P, Dow Close Higher on Fed’s Aggressive New Strategy; Higher Yields Lift Financial Sector

The major U.S. stock indexes finished mixed on Thursday with the S&P 500 and the Dow advancing as investors showed their approval of the U.S. Federal Reserve’s new strategy to adopt an average inflation target and restore the United States to full employment, as well as a promising development in the fight to contain the coronavirus pandemic. The NASDAQ closed marginally lower.

In the cash market on Thursday, the benchmark S&P 500 Index settled at 3484.55, up 5.82 or +0.19%. The blue chip Dow Jones Industrial Average finished at 28492.27, up 160.15 or +0.64% and the technology-based NASDAQ Composite closed at 11625.34, down 39.72 or -0.42%.

The Fed Stole the Headlines

Economic recovery was at the forefront in Fed Chairman Jerome Powell’s remarks made as part of the Kansas City Fed’s virtual Jackson Hole symposium. In the speech Powell outlined the central bank’s aggressive new strategy to support the economy by lifting inflation and returning the economy to full employment, Reuters reported.

Financial Sector Shines

The Fed’s new strategy sent Treasury yields higher, which gave a lift to interest rate-sensitive financials. The financial sector provided the biggest boost to the S&P 500 and the Dow, pushing the former to its fifth straight record closing high and the latter within a hair’s breadth of reclaiming positive territory for the year so far, Reuters wrote.

The Dow remains more than 3% below its record high reached in February. The NASDAQ Composite reached an all-time high, but declines in market-leading momentum stocks capped gains in all three major stock averages.

Stocks in the News

Shares of Abbott Laboratories jumped after the company won U.S. approval to market a cheap, portable, rapid COVID-19 antigen test, which could be a step toward containing the pandemic that sent the U.S. economy spiraling into recession.

Shares of Walmart Inc and Microsoft Corp rose after announcing a joint bid for Tik Tok’s U.S. assets.

Boeing Co closed higher after the European Union Aviation Safety Agency announced plans to begin flight tests of its grounded 737 MAX plane.

Luxury retailer Tiffany & Co advanced after reporting stronger-than-expected profit just days after delaying its $16.2 billion sale to France’s LVMH.

On the other end of the retail scale, discount stores Dollar General Corp and Dollar Tree Inc also beat quarterly profit expectations.

Finally, cosmetics maker Coty Inc plunged after retail closures and weak demand led to a bigger-than-expected quarterly loss.