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S&P 500 Ends at Record After Fed Affirms Accommodative Policy

Stocks finish mixed Wednesday after the Federal Reserve's March meeting minutes indicated its accommodative policy would continue.

Stocks ended mixed Wednesday after the Federal Reserve indicated it would retain its accommodative policy as the U.S. economy recovers from the coronavirus pandemic. 

The S&P 500 gained 0.15% to close at a record 4,079, while the Dow Jones Industrial Average ticked up 16 points, or 0.05%, to 33,446. The Nasdaq edged down 0.07% to 13,688.

At the March meeting, the U.S. central bank projected interest rates would remain near zero through at least through 2023 and upgraded its outlook for economic growth. It also said inflation likely would rise past 2% in the coming months.

The Fed said in the minutes released Wednesday that it would be some time before conditions were met that would warrant a scaling back of the central bank's monthly asset purchases of $120 billion.

“Participants noted that it would likely be some time until substantial further progress toward the Committee’s maximum-employment and price-stability goals would be realized and that, consistent with the Committee’s outcome-based guidance, asset purchases would continue at least at the current pace until then,” according to the minutes from the Fed's March 16-17 meeting.

The Fed noted the economy was “a long way” from its goals of maximum employment and inflation of 2%.

"There is little surprise in the minutes. The dovish language indicated that the [Federal Open Market Committee] is not thinking about tapering now," said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management. 

"This is positive for the risk market. And the rate market should welcome this as well," Ren added.

Benchmark U.S. Treasury yields held slightly lower after the release of the Fed minutes. The 10-year was at 1.654% Wednesday. As recently as last week, yields traded at a 14-month high of about 1.78%.

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CME Group's FedWatch tool has continued to indicate little chance of an interest rate hike later this year. That's even as the International Monetary Fund said it expected the U.S. economy to expand 6.4% in 2021 -- its fastest growth since 1984 -- and 3.5% in 2022. 

That growth is being supported by President Joe Biden’s $1.9 trillion coronavirus relief package, and an acceleration in the rollout of vaccines.

Biden also has proposed a $2.3 trillion infrastructure proposal, a plan that would be funded by an increase in the corporate tax rate to 28% from 21%.

Treasury Secretary Janet Yellen said the revenue "generated by the tax plan will be turned into funding for both traditional infrastructure and the more modern kind needed to run a digital economy, like high-speed broadband networks."

JPMorgan Chase  (JPM) - Get JP Morgan Chase & Co. Report Chief Executive Jamie Dimon said Wednesday that the current economic recovery could extend into a boom that lasts for another two years

But he cautioned that rising debt levels and simmering inflation pose key risks that investors have yet to fully appreciate.

In his regular letter to shareholders ahead of next week's first-quarter earnings, Dimon said the post-pandemic recovery, powered by trillions in government spending, near-zero interest rates and support from the Fed, could justify current stock market valuations, which he describes as "quite high, by almost all measures."

Jim Cramer: Jamie Dimon Throws Down the Gauntlet

Oil prices settled 0.7% higher but remained below $60 a barrel as OPEC+'s decision to gradually increase production in the coming months offset data from the American Petroleum Institute showing a surprise 2.6 million barrel reduction in domestic crude stocks.