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S&P Closes at Record as Powell Says Fed Has Tools to Curb Inflation

Stocks end higher after the Federal Reserve chairman says that if prices move beyond comfortable levels it has the tools to curb them.

The S&P 500 closed Thursday at a record for a second day after Federal Reserve Chairman Jerome Powell said he expected any inflation resulting from an economic recovery to be temporary, but if prices move "persistently and materially above levels we’re comfortable with" the central bank has the tools to curb them.

The S&P, which also set an intraday record during the session, closed up 0.42% to 4,097. 

The Dow Jones Industrial Average rose 57 points, or 0.17%, to end at 33,503. The Nasdaq finished up 1.03% to 13,829 on gains in Apple  (AAPL) - Get Apple Inc. Report and  (AMZN) - Get Inc. Report.

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In the minutes from its March meeting, the Fed said it would be some time before conditions were met that would warrant a scaling back of its monthly asset purchases of $120 billion or a boost in short-term interest rates from nearly zero.

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

"The economy is continuing to improve, although it’s an uneven recovery both in terms of the job market as well as in terms of geographic diversity of outcomes, and that’s to be expected given that conditions on the ground are fluid," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

On Thursday, Powell said in a virtual meeting of the International Monetary Fund that the Fed "would be monitoring inflation expectations very carefully. 

"If we see them moving persistently and materially above levels we’re comfortable with, then we’d react to that,” he added.

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He also said the global recovery "remains uneven and incomplete.” 

Evidence of that was an unexpected increase last week in the number of Americans filing for first-time unemployment benefits.

Powell also said a return to full economic activity won't happen until the COVID-19 pandemic is controlled everywhere.

Benchmark 10-year Treasury yields ticked lower Thursday to 1.635%.

Stocks ended mixed Wednesday with the S&P 500 closing at a record high of 4,079 and the Dow gaining 0.05% to 33,446. The Nasdaq slipped 0.07%.

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Shares of Apple rose 1.9% Thursday despite a report that said production of some MacBooks and iPads has been postponed because of the global chip shortage.

Chip shortages have caused delays in a key step in MacBook production - the mounting of components on printed circuit boards before final assembly, sources told Nikkei Asia. Some iPad assembly was postponed because of a shortage of displays and display components, sources said.

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Oil prices in the U.S. declined Thursday by 0.2% to $59.57 a barrel.