(New throughout, updates oil and gold to settlement, adds Fed
minutes and comment)
* Equities gain on dovish Fed stance
* Long-term U.S. Treasury yields rise
* Oil gains as storm hits U.S. output, inventories drop
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog:
NEW YORK, Sept 16 (Reuters) - Equity markets rose and the
dollar firmed on Wednesday after the Federal Reserve kept
interest rates near zero, as expected, and said it would
continue its bond-buying program to stimulate the U.S. economy
as part of a dovish policy stance.
Longer-term U.S. Treasury yields rose and gold prices edged
higher after the Fed promised to keep rates on hold until
inflation is on track to "moderately exceed" the U.S. central
bank's 2% inflation target "for some time."
"They want to be dovish. They want to be super dovish. The
market is priced for dovish," said Nancy Davis, managing partner
and chief investment officer at Quadratic Capital Management LLC
in Greenwich, Connecticut.
"Nobody thinks there's going to be any kind of inflation at
all and the guidance is more dovish and in line with what the
market expected," Davis said, adding that she believes there is
a danger inflation could exceed expectations.
New economic projections released with the Fed's policy
statement showed rates on hold through at least 2023, with
inflation never breaching 2% over that time. Policymakers saw
the economy shrinking 3.7% this year, far less steep than the
6.5% decline forecast in June. Unemployment, which registered
8.4% in August, was seen falling to 7.6% by the end of the year.
At the Fed's last meeting in August the U.S. central bank
adopted a new approach to inflation and unemployment that will
allow the economy to run a little hotter than in the past to
help ensure jobs growth for lower income earners.
MSCI's benchmark for global equity markets
rose 0.25% to 577.1, while its emerging markets index
On Wall Street, the Dow Jones Industrial Average rose
0.72% and the S&P 500 gained 0.20%. The Nasdaq Composite
dropped 0.45%, pulled lower by declines in Apple Inc
, Amazon.com Inc, Facebook Inc and
Microsoft Corp - stocks that have propelled the index
to record highs this year.
In Europe, the broad FTSEurofirst 300 index closed
up 0.49% at 1,446.16. London's FTSE 100 lagged gains by
other European indices, down 0.44% at the close, but the
struggling pound was propped up by a weaker dollar.
European retail stocks surged on strong results from
Zara-owner Inditex after it said there was a
progressive return to normality, with online sales growing
sharply and store sales recovering. Shares of the Spanish
retailer jumped 8.1%.
U.S. consumer spending slowed in August, with retail sales
excluding automobiles, gasoline, building materials and food
services sliding 0.1% after a downwardly revised 0.9% increase
Retail sales lost a little steam in August, but consumers
overall are still doing well despite modest weakness relative to
expectations, said Russell Price, chief economist at Ameriprise
Financial at Troy, Michigan.
When the pandemic slowed economic growth, consumers were in
a relatively strong financial condition, the direct opposite of
what is normally the case for an economic downturn, he said.
"Consumers are still overall doing well despite the modest
weakness relative to expectations," Price said.
The yen rose overnight and extended gains that hit a nearly
seven-week high of 104.995 to the dollar as investors sought
The dollar index rose 0.016%, with the euro
down 0.34% to $1.1805.
The Japanese yen strengthened 0.44% versus the
greenback at 104.95 per dollar.
The 10-year U.S. Treasury note fell 1.2 basis
points to 0.6871%.
U.S. gold futures settled up 0.2% at $1,970.50 an
ounce. Spot gold prices rose 0.14% to $1,958.26 an ounce.
Brent crude futures rose $1.69 to settle at $42.22 a
barrel, while U.S. crude futures settled up $1.88 at
$40.16 a barrel.
Zinc prices pushed toward a 16-month highs hit earlier this
month as resurgent Chinese industry bolstered the outlook for
demand and the yuan strengthened, making metals more affordable
for Chinese buyers.
Oil prices rose for a second day, up more than 2%, as
Hurricane Sally closed U.S. offshore production and an industry
report showed U.S. crude inventories unexpectedly decreased.
(Reporting by Herbert Lash; editing by Catherine Evans and