US stocks notch record highs as Fed makes long-awaited announcement it will taper bond buying

US stocks notch record highs as Fed makes long-awaited announcement it will taper bond buying

Stocks finished Wednesday at record highs as the Federal Reserve met expectations in outlining plans to reduce stimulus spending as the economy moves out of the height of the COVID pandemic but investors still keeping watch on interest rates as inflation remains high. All three major equity benchmarks ended at new all-time highs. The Fed said it would begin tapering asset purchases this month. It has been buying at least $80 billion in Treasurys and $40 billion in mortgage-backed securities every month to help markets function smoothly during the pandemic. The economy has made "substantial further progress" toward key recovery goals, leading the Fed to say it will cut down by $10 billion a month purchases for Treasurys and by $5 billion for mortgage bonds. "It is true that the Fed will need to raise interest rates next year - possibly more than once - if inflation continues to rise at an elevated pace, but it is also true that the Fed would prefer to leave interest rates at near-zero levels as long as possible to allow the unemployment rate to go lower and the participation rate to go higher," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance,