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Stocks traded higher Wednesday after the Federal Reserve projected interest rates would remain near zero through at least through 2023 and upgraded its outlook for economic growth.

© TheStreet Dow Jumps After Fed Maintains Outlook for Zero Rates Through 2023

“Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak,” the Fed said in a policy statement Wednesday. “Inflation continues to run below 2%.”

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The Dow Jones Industrial Average rose 158 points, or 0.61%, to 33,024, the S&P 500 gained 0.36% and the tech-heavy Nasdaq was up 0.46%.

The central bank also kept interest rates unchanged at its meeting Wednesday and maintained its asset purchase program at $120 billion of bonds a month, saying it would keep that pace until substantial further progress” was made on its employment and inflation goals.

Seven of 18 Fed officials said they expect higher interest rates by the end of 2023 – at the Fed’s December meeting five officials predicted higher rates by 2023.

The Fed said Wednesday gross domestic product was expected to increase 6.5% in 2021 before cooling off in 2022 and 2023. Previously, the central bank expected economic growth of 4.2% in 2021.

The central bank expects inflation, as measured by personal consumption expenditures, to rise to 2.4% this year and then slow next year to 2%.

Bond yields have pushed higher recently on rising inflation expectations and have sparked a rotation to value stocks from high-growth equities, particularly technology shares. The 10-year Treasury yield was at 1.657% Wednesday, coming off a 14-year high of 1.689%.

“We are seeing interest rate levels that should not concern or derail the economy – it is normal to see rates substantially rise during a recovery, and quickly,” said David W. Wagner, portfolio manager and analyst at Aptus Capital Advisors. “It is healthy to see rates rise, along with economic growth.”

Real Money contributor James “Rev Shark” DePorre, however, said interest rate worries were undermining “individual stock-picking, and that is what is making trading very difficult right now.”

Stocks ended mostly lower Tuesday and the S&P 500’s winning streak of five sessions came to an end as investors awaited the Fed’s projections on the U.S. economy. The Dow ended a seven-day streak of gains.

Oil prices declined Wednesday after the International Energy Agency said ample global supplies and significant spare capacity linked to OPEC production cuts make a new price “supercycle” unlikely.

“Our data and analysis suggest otherwise,” Paris-based IEA said in its monthly report. “There is more than enough oil in tanks and under the ground to keep global oil markets adequately supplied.”

Plug Power was slumping almost 17% Wednesday after the fuel-cell company disclosed accounting errors in results for 2018, 2019 and the first three quarters of 2020.

This article was originally published by TheStreet.

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