US stock indexes hold steady

Associated Press

NEW YORK

Stocks held steady on Wall Street on Thursday, and bond prices gave back some of their big gains from the prior day as a rally fueled by the Federal Reserve’s announcement on interest rates Wednesday faded.

The Fed is hoping to lift rates gradually off their record lows, where they stayed for seven years after the 2008 financial crisis. With both economic data and inflation picking up recently, some investors began to consider the possibility that the Fed may try to raise rates four times this year. But the Fed on Wednesday stuck with its forecast for three.

That gradual pace is one reason investors remain enthusiastic about stocks in the face of rising rates, which historically have spooked stock holders because they can slow economic growth and corporate profits.

With rates starting from such a low base and the pace set to be so slow, it may not be fair to call these Fed moves as “hiking” or “tightening,” said Rich Taylor, fixed-income client portfolio manager at American Century.

“We are in the beginning stages of a re-normalization of interest rates,” Taylor said. “A 2.5 percent yield on a 10-year note is not a normal yield. It’s still a DEFCON 4, almost emergency-level rate.”