US Stocks Rise, Dollar Falls After Dovish Fed Announcement

Wall Street stocks rallied and the dollar tumbled Wednesday as the Federal Reserve again stressed that it would maintain its highly accommodative stance and keep interest rates at zero until the economy recovers.

US stocks were in positive territory before the meeting, but added to gains after the Fed statement and press conference. European and Asian markets were mixed earlier in the day.

Fed Chair Jerome Powell said the central bank has seen rising evidence that the recent spike in COVID-19 cases in the United States was weighing on activity, and characterized the current downturn as "the most severe of our lifetimes."

Halting the spread of COVID-19 is key as American consumers will not return to spending until they feel it is safe to do so, Powell said, but in the meanwhile some additional support will be needed to make it through the crisis.

All three major US stock indices finished solidly higher, with the Nasdaq leading as it gained 1.4 percent. The dollar also pulled back, tumbling to a two-year low against the euro.

"Mr. Powell's dovish words mean that the Fed will be ready to support growth with further measures if needed, which is reassuring for equity bulls, although the dollar could remain under pressure in the coming months," said Gorilla Trades strategist Ken Berman.

The greenback's retreat came "after the Fed left monetary policy unchanged and sounded no more dovish than the market had expected," said Joe Manimbo, analyst at Western Union Business Solutions.

"The specter of low interest rates for longer is decidedly dollar-negative and could leave it vulnerable to continued weakness over the short run."

Investors also appeared to shrug off a congressional hearing with tech heavyweights Apple, Amazon, Facebook and Google parent Alphabet.

Although the chief executives of those companies faced tough questioning during the early part of the hearing, there appeared to be no agreement on specific actions to penalize the giants.

All four companies gained at least one percent ahead of their earnings reports on Thursday.

That day will also see the release of an estimate of second-quarter US GDP, which analysts expect to be an historically big plunge of 35 percent due to business shutdowns imposed during the period.

New York - Dow: UP 0.6 percent at 26,539.57 (close)