Dow trades around 200 points higher as Fed says it ‘will soon be appropriate’ to lift
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U.S. stocks benchmarks was climbing but off its highs off the session Wednesday, as the Federal Reserve, as expected didn’t take any action for this meeting, keeping benchmark rates at a range between 0% and 0.25%, but laid the groundwork for a rate increase as early as March.
That said, there was no commitment to a move at the central bank’s next meeting in mid-March. With consumer inflation now at a 7% annual rate, the Fed wants to get going and move away from its easy-policy stance. The Fed decided today to continue the gradual pace of monthly asset purchases so that they will end in March.
The central bank’s rate-setting Federal Open Market Committee said that it “will soon be appropriate” to lift rates. In a separate document, the central bank said it could start shrinking its nearly $9 trillion balance sheet after interest-rate hikes start.
“With inflation well above 2% and a strong labor market, the FOMC expects it will soon be appropriate to raise the target range for the federal-funds rate,” the Fed said in its policy statement.
Federal Reserve Chairman Jerome Powell is set to host a news conference to discuss the central bank’s policy later in the session at 2:30 p.m. Eastern Time.
This week thus far stocks have been knocked around by expectations that the FOMC would kick off a series of rate increases to combat building inflationary pressures, removing a level of liquidity and rates near 0% that speculators have enjoyed for years.
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The Dow Jones Industrial Average
DJIA,
-0.02%
traded 200 points, or 0.5%, higher to 34,482. -
The S&P 500 index
SPX,
-0.54%
advanced 50 points, or 1.1%, to 4,407. -
The Nasdaq Composite Index
COMP,
-1.40%
climbed 284 points, or 2.1%, to reach 13,825. -
The 10-year Treasury note rate
TMUBMUSD10Y,
1.827%
was at around 1.80%, compared with around 1.78% before the policy statement. -
Gold futures
GCG22,
-0.49% GC00,
-0.40%
tumbled, falling $22.80, or down 1.2%, to settle at $1,829.70 an ounce, after touching a two-month high on Tuesday, but retraced some losses in electronic trade on Globex after the Fed decision.
Against that backdrop, yields have risen and rate-sensitive segments of the market, such as the tech-heavy Nasdaq Composite Index, have fallen as investors discount cash flows for once-highflying corporations in the face of inflation and rising rates.
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