By Dawn Lim and Joe Wallace
U.S. stocks climbed Wednesday as Federal Reserve officials reiterated their support for an economy battered by the coronavirus pandemic.
The S&P 500 ticked up 1.3%, with all 11 sectors in the index trading higher. The Dow Jones Industrial Average rose about 165 points, or 0.6%. The tech-heavy Nasdaq Composite rose 1.5%.
The Fed, as expected, left rates near-zero at the end of Wednesday's policy meeting. The central bank also said it would continue increasing holdings of Treasurys and other securities.
"It's very hard to fight the central bankers and the amount of fiscal stimulus that's been introduced into the system," said Chris Dillon, a capital markets investment specialist at T. Rowe Price Group Inc. "And more is expected to come."
The Fed moved rapidly in the midst of the market rout in March to pump money into the economy, buoying credit markets and U.S. stocks. The S&P 500 was on course Wednesday to return to positive territory for the year, up 0.8%.
"The current economic downturn is the most severe in our lifetimes," Mr. Powell said during Wednesday's press conference. He pledged the Fed would use its full range of tools to support the economy and reiterated that the course of the recovery would ultimately depend on the trajectory of the virus.
The central bank had said Tuesday it would extend emergency lending programs that had been set to run through September by an additional three months to keep propping up activity during the pandemic.
The Fed's aggressive actions have created new conundrums for how investors should calculate the risks of the assets they hold even as the pandemic has left millions unemployed, and upended how people live and work.
The U.S. death toll from the coronavirus pandemic approached 150,000 as fatalities rose in parts of the country. New cases have shown signs of leveling off, but in California, Florida and Texas, the seven-day average daily death toll was more than the 14-day average, according to an analysis of Johns Hopkins University data by The Wall Street Journal.
The world economy will operate at 90% capacity until a vaccine removes the need for social distancing and other prevention measures, said Samy Chaar, chief economist at Swiss private bank Lombard Odier.
Gold prices settled at another all-time high. Gold for July delivery, the front month futures contract, gained 0.5% to $1953.50, rising for nine consecutive days.
The dollar slipped, with the WSJ Dollar Index, which tracks the U.S. currency against those of major trading partners, falling 0.2%.
In bond markets, the yield on 10-year U.S. Treasury notes was largely unchanged on Wednesday from 0.581% on Tuesday.
Earnings at major U.S. companies have so far beaten the gloomy expectations of analysts. Just over a third of companies in the S&P 500 had reported through Tuesday, posting a 38% decline in earnings from a year earlier, according to FactSet. Still, 78% of firms topped forecasts.
In earnings-related news, General Electric fell 4% after the industrial conglomerate said it burned through less cash in the June quarter than it had previously warned. General Motors reported a smaller loss than analysts had expected, and shares fell 2%.
L Brands jumped more than 30% after the embattled retail company said it plans to lay off about 850 corporate employees. Advanced Micro Devices rose 12% after the chip maker reported higher earnings and lifted its sales forecast for the year.
Tech stocks held strong as the chief executives of Amazon.com, Apple, Facebook and Google appeared before Congress. The House Antitrust Subcommittee is investigating the market dominance of online platforms. The four stocks make up roughly a fifth of the S&P 500, according to FactSet.
Shares of Apple, Amazon, Facebook and Google parent Alphabet rose more than 1% Wednesday.
"Scrutiny of the big tech firms is not new. It's been ongoing for some time," said Mona Mahajan, the U.S. investment strategist at Allianz Global Investors. She predicted that investors are buying tech stocks in hopes of profiting from a bounce after some tech firms report their quarterly results Thursday.
Shares of big technology firms have been the biggest beneficiaries of the stock market's rally since March. Investors are betting customers will become more dependent on major e-commerce platforms and social media platforms.
Overall, "the Fed intervention adds a bit of a TINA effect," said Ms. Mahajan, a nod to the investment shorthand for "There Is No Alternative" to stocks. "That's why you see equities continuing to rally."
Overseas, the Stoxx Europe 600 index slipped less than 0.1%. China's Shanghai Composite Index advanced 2.1%, and Japan's Nikkei 225 fell 1.2%.
Write to Dawn Lim at email@example.com and Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
July 29, 2020 15:42 ET (19:42 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.