By Medha Singh and Devik Jain
Aug 27 (Reuters) - The S&P 500 and the Nasdaq rose to record highs on Thursday as the Federal Reserve sought to achieve inflation averaging 2% over time in an attempt to lift the U.S. economy out of a deep pandemic-driven recession.
Setting out the central bank's aggressive new strategy at a virtual Jackson Hole symposium, Fed chief Jerome Powell said it would offset below-2% periods with higher inflation "for some time," and ensure employment doesn't fall short of its maximum level.
Eight of the 11 major S&P sectors were trading higher, with economically-sensitive financials .SPSY leading gains. The communication services index .SPLRCL, which houses Google-parent Alphabet Inc GOOGL.O and Facebook Inc FB.O, fell for the first time in four days.
"The strategy should be positive in the short term as it could reduce the potential for interest rate hikes," said Nancy Davis, chief investment officer at Quadratic Capital Management LLC in Greenwich, Connecticut.
"At the same time, the statement acknowledges that Fed 'has less scope to support the economy during a downturn by simply cutting the federal funds rate'."
The S&P 500 and the Nasdaq have recovered their coronavirus-driven losses, largely driven by a tech-related rally at a time when the U.S. economy is struggling with its worst downturn since the Great Depression.
Data on Thursday showed weekly jobless claims hovered around 1 million last week, suggesting the labor market recovery was stalling.
At 10:52 a.m. ET, the Dow Jones Industrial Average .DJI was up 255.59 points, or 0.90%, at 28,587.51, on course to turn positive on the year for the first time since the coronavirus-driven crash in March.
The S&P 500 .SPX was up 15.09 points, or 0.43%, at 3,493.82, and the Nasdaq Composite .IXIC was up 10.94 points, or 0.09%, at 11,676.00.
Boeing Co BA.N rose 3.1% after the European Union Aviation Safety Agency announced plans to begin flight tests of its 737 MAX plane, a move viewed as a key milestone toward its return to service.
Abbott Laboratories ABT.N surged 6.6% after the medical device maker won U.S. marketing authorization for a $5 rapid COVID-19 portable antigen test.
Cosmetics maker Coty Inc COTY.N shed 5.5% after posting a bigger-than-expected quarterly loss as demand for its beauty products took a hit from the closure of stores and parlors.
Advancing issues outnumbered decliners 1.36-to-1 on the NYSE, while declining issues outnumbered advancers 1.07-to-1 on the Nasdaq.
The S&P index recorded 34 new 52-week highs and no new low, while the Nasdaq recorded 52 new highs and 10 new lows.
(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Saumyadeb Chakrabarty, Sagarika Jaisinghani and Arun Koyyur)
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