U.S. stock indexes overcame an afternoon wobble to close mostly higher Wednesday after the Federal Reserve said it would start reducing its huge bond portfolio next month and was still on track to raise interest rates later this year.
The central bank’s announcement drove bond yields higher, lifting shares in banks and other financial companies. Banks benefit from higher bond yields because it means they can charge higher interest rates on loans.
High-dividend stocks like utilities and household goods makers fell. Income-seeking investors find those stocks less appealing when bond yields move higher.
“The announcement was pretty much in line with what was expected,” said David Chalupnik, head of equities at Nuveen Asset Management. “So far, the market is taking it in stride, but I don’t know if it should. This will slowly impact growth.”
The Standard & Poor’s 500 index inched up 0.1 percent, to 2,508.24. The Dow Jones industrial average rose 41.79 points, or 0.2 percent, to 22,412.59. The modest gains nudged both indexes to record highs, extending a run of milestones that stretches back to last week.
The Nasdaq composite lost 0.1 percent, to 6,456.04. The Russell 2000 index of smaller-company stocks added 0.4 percent, to 1,445.42. — AP