Earlier this week, Fed Chairman Jay Powell, in a new policy thrust said the central bank would target higher inflation on the average over a longer time and keep rates at near zero to help both economic and labor markets recover amid the COVID-19 pandemic.
The Dow, the broadest index on the New York Stock Exchange, closed up 162 points on Friday, or 0.6 percent, at 28,654. For the year, the index was up 0.4 percent, marking its return to the green lane since a collapse in March as US businesses went into lockdown on the coronavirus scare. For the week, the Dow was up 3.2 percent.
"The promise of lower rates for longer was music to the ears of Wall Street bulls, with the banks loving the steepening of the yield curve that accompanied the Fed statement," said Craig Erlam, analyst at online broking platform OANDA.
The S&P 500, a barometer for the top 500 US stocks, hit record highs for a sixth session in a row, peaking at 3,510, before settling up 22 points, or 0.7 percent, at 3,507. For the week, the S&P rose 2.6 percent, while for the year it gained 8.6 percent.
The tech-heavy Nasdaq Composite index climbed 70 points, or 0.6 percent, to finish at 11,696. It hit a record high of 11,709 earlier. For the week, it was up 3.4 percent and for the year, it rose 30 percent.