US STOCKS-Wall Street closes higher as Fed soothes recovery worries

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By Stephen Culp
NEW YORK, June 15 (Reuters) - Wall Street closed higher on
Monday following an announcement by the U.S. Federal Reserve
regarding its corporate bond purchasing program that boosted
investor confidence, which had been wavering amid a spike in new
COVID-19 cases.
All three major U.S. stock indexes reversed losses in
afternoon trading, following the Fed's decision to apply an
indexing approach to its secondary market corporate credit
facility to create a more diversified portfolio. nL1N2DS1EY]
"No doubt the market liked it: Who doesn't like more cake
and ice cream?" said Robert Pavlik, chief investment strategist,
senior portfolio manager at SlateStone Wealth LLC in New York.
"It fuels traders to buy individual stocks and take on
higher risk because the Fed has backstopped the bond market and
kept a tighter lid on interest rates," he added.
A flood of liquidity in the form of fiscal and economic
stimulus, along with uneven but steady re-openings of state and
local economies, sparked a remarkable rally in the stock market
since its late-March trough.
Gains were led by cyclical stocks and tech, with S&P 500
financials .SPNY among the days biggest percentage gainers.
"The banks probably have a bunch of corporate debt on their
balance sheets and now there's a buyer for it," Pavlik added.
"Someone's going to be buying those bonds because the Fed is
telling them it's OK."
But surging new cases of COVID-19 in China, where the
pandemic originated, prompted the reintroduction of containment
measures, and record hospitalizations in several U.S. states
dampened investor risk appetite. On the flipside, an uptick in China's factory output and a
much better-than-expected Empire State manufacturing report gave
evidence that the pandemic-hobbled global economy was on the
road to recovery. Earlier, the U.S. Federal Reserve announced it had opened
registration for its Main Street Lending program to help
businesses weather the storm of mandated lockdowns. week, the central bank provided its first pandemic era
outlook, and market participants will be closely following Fed
Chair Jerome Powell's testimony this week before Congress for
details on the central bank's somber economic projections.
Unofficially, the Dow Jones Industrial Average .DJI rose
169.17 points, or 0.66%, to 25,774.71, the S&P 500 .SPX gained
26.37 points, or 0.87%, to 3,067.68 and the Nasdaq Composite
.IXIC added 138.26 points, or 1.44%, to 9,727.07.
Shares of Drugmaker Moderna Inc MRNA.O jumped following a
report that Israel is in advanced talks to buy its coronavirus
vaccine. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
S&P 500 market cap, daily moves https://tmsnrt.rs/2YCDodm
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