Tech stocks lift Wall Street to new highs after Fed’s stimulus comments

Technology stocks have lifted Wall Street to record highs after the US Federal Reserve’s dovish comments eased fears of a sudden tapering in monetary stimulus and boosted optimism around an economic recovery.

Apple jumped 2.3% to an all-time high, while Microsoft, Amazon and the Google owner Alphabet, rose between 0.9% and 1.3%, helping the tech-heavy Nasdaq outperform the S&P 500 and the Dow Jones.

High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.

The benchmark index is tracking its longest monthly winning streak since 2018 on the promise of cheap money, with investors shrugging off signs of a slowing economic recovery and surging Covid-19 cases.

The Fed chair, Jerome Powell, said on Friday that the central bank would continue to be cautious in its approach to tapering its massive pandemic-era stimulus and reaffirmed a steady economic recovery.

“The market was wholly prepared for a taper timeline last week and the Fed not really commenting has helped give markets an added push on hopes that easy policies will help offset some risks around rising infection cases,” said Ross Mayfield, an investment strategist at the investment firm Baird in Louisville, Kentucky.

“Although, if the Fed continues to be so dovish in its policy meetings going ahead, markets might think that there are some problems brewing in the economic recovery process.”

The S&P 500 has risen 3.2% so far in August – a seasonally weak period for stocks – and Wells Fargo analysts said last week they expect the index to rise another 8% by the end of the year.