US STOCKS-S&P, Dow close higher on new Fed inflation stance, COVID test hopes

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By Stephen Culp
NEW YORK, Aug 27 (Reuters) - The S&P 500 and the Dow
advanced on Thursday as investors digested the U.S. Federal
Reserve's new strategy to adopt an average inflation target and
restore the United States to full employment, as well as a
promising development in the fight to contain the coronavirus
pandemic.
Nasdaq closed narrowly lower.
The Fed's new strategy sent Treasury yields higher, which
gave a lift to interest rate-sensitive financials .SPSY .
"The steepening of the yield curve is a welcome addition,
particularly on a day where the market is rising," said Matthew
Keator, managing partner in the Keator Group, a wealth
management firm in Lenox, Massachusetts.
The financial sector provided the biggest boost to the S&P
500 and the Dow, pushing the former to its fifth straight record
closing high and the latter within a hair's breadth of
reclaiming positive territory for the year so far.
The Dow remains more than 3% below its record high reached
in February.
Declines in market-leading momentum stocks capped gains in
all three major stock averages.
"There seems to be a bit of rotation with regards to the
news today and how the market has responded, giving the markets
a value bump," Keator added.
Shares of Abbott Laboratories ABT.N jumped after the
company won U.S. approval to market a cheap, portable, rapid
COVID-19 antigen test, which could be a step toward containing
the pandemic that sent the U.S. economy spiraling into
recession. Economic recovery was forefront in Fed Chairman Jerome
Powell's remarks made as part of the Kansas City Fed's virtual
Jackson Hole symposium. In the speech Powell outlined the
central bank's aggressive new strategy to support the economy by
lifting inflation and returning the economy to full employment.
"The statement by Powell in some regards is telegraphing a
continued dovish stance for quite some time," Keator said.
But with last week's initial jobless claims stubbornly
hovering above the 1 million mark, according to the Labor
Department, a return to full employment currently appears to be
a long haul. Unofficially, the Dow Jones Industrial Average .DJI rose
161.31 points, or 0.57%, to 28,493.23, the S&P 500 .SPX gained
5.85 points, or 0.17%, to 3,484.58 and the Nasdaq Composite
.IXIC dropped 39.72 points, or 0.34%, to 11,625.34.
Of the 11 major sectors in the S&P 500, financials enjoyed
the biggest percentage gain while communications services
lagged.
Shares of Walmart Inc WMT.N and Microsoft Corp MSFT.O
rose after announcing a joint bid for TikTok's U.S. assets.

Boeing Co BA.N closed higher after the European Union
Aviation Safety Agency announced plans to begin flight tests of
its grounded 737 MAX plane.
Luxury retailer Tiffany & Co TIF.N advanced after
reporting stronger-than-expected profit just days after delaying
its $16.2 billion sale to France's LVMH LVMH.PA . On the other end of the retail scale, discount stores Dollar
General Corp DG.N and Dollar Tree Inc DLTR.O also beat
quarterly profit expectations.
Cosmetics maker Coty Inc COTY.N plunged after retail
closures and weak demand led to a bigger-than-expected quarterly
loss.