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Stocks Close Mixed as Fed Says Rates to Stay Low Through 2023

The Dow closes higher but tech stocks slide. The Federal Reserve signals it will keep interest rates low through at least 2023.

Stocks ended mixed Wednesday, with tech stocks leading the retreat, as the Federal Reserve held interest rates at near zero and indicated it would keep them there through at least 2023 to assist the economy during the coronavirus pandemic.

The Dow Jones Industrial Average lost ground in late trading and ended higher by 36 points, or 0.13%, to 28,032. The S&P 500 finished down 0.46% and the Nasdaq slipped 1.25%.

Apple  (AAPL) , Amazon  (AMZN) , Facebook  (FB)  and Netflix  (NFLX)  all gave up ground.

The Federal Reserve had been expected to hold rates near zero, where it lowered them to at the beginning of the coronavirus pandemic in March.

Federal Reserve Chairman Jerome Powell said in August the central bank would keep interest rates low even if inflation rose above its target levels.

On Wednesday, the central bank noted that both economic growth and employment have improved in recent weeks, but remain well below levels seen at the beginning of the year. 

The Fed also said it would purchase additional assets, such as government and corporate bonds, in order to support its monetary stance and the broader economy.

The central bank said it saw the economy contracting by around 3.7% in 2020, compared with its assessment in June of a 6.5% slump triggered by the coronavirus pandemic. 

Unemployment, the Fed's projections indicate, will likely sit around 7.6% by the end of the year, compared with its prior projection of 9.3%.

"The Committee seeks to achieve a maximum employment and inflation rate of 2% over the longer term," the Fed said in its  statement. 

With inflation running persistently below this longer-run goal, "the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%," the Fed added.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said, "Going forward the market will benefit from an extremely dovish Fed, largely sitting on the sidelines, but will need to contend with increased volatility due to the upcoming presidential election and a possible increase in covid outbreaks as we head into fall and the typical flu season."

Jason Pride, chief investment officer of private wealth at Glenmede, said that while "monetary policy itself cannot solve the underlying cause of this recession - the pandemic - it can prime the economy for a stronger, more durable recovery once the dust finally settles on this pandemic."

Retail sales for August in the U.S. rose for the third month in a row. But they slowed as federal relief for unemployed Americans expired and activity at stores and restaurants moderated as business struggle to reopen.

Snowflake  (SNOW)  kicked off trading on Wednesday at $245 a share, more than double its initial public offering price of $120, solidifying it as the largest software-focused IPO ever. The shares finished up 113% at $255.45.

Oil prices in the U.S. rose 4.65% to $40.06 a barrel as Hurricane Sally made landfall in Alabama with sustained winds of more than 105 mph, shuttering nearly a quarter of all Gulf region output.