Investors were closely watching the Federal Reserve today, looking to see whether the statement accompanying the decision on interest rates contained a phrase about keeping interest rates exceptionally low for a while.
They got what they wanted, as the Fed said "the Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Investors were looking for that phrase "extended period." They got it, and markets rallied after the Fed released the text of its decision. The Dow was up by about 150 points right after the Fed's decision, but it fell off those highs and closed slightly higher.
On the day, the Dow closed up by 0.3 percent to 9,802. The S&P 500 was basically unchanged, closing at 1,047. And the Nasdaq fell slightly, closing at 2,056.
Financial shares plunged, causing the positive reaction to the Fed's statement to evaporate. Shares of companies like JPMorgan Chase, Wells Fargo, and Citigroup were off by as much as three percent after news that the House would move up the effective date of credit card regulations. And the carnage in the insurance sector was even worse.
Shares of AIG and Genworth Financial dropped by more than seven percent. And shares of Hartford Financial Group were off by more than five percent.
Still, the news wasn't all bad. In the release from the Fed announcing its decision to keep interest rates low, the Fed said "economic activity has continued to pick up." They added that "the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth."
Now that investors received good news from the Fed, they'll be looking at the initial unemployment claims number and the October payrolls numbers. These will help indicate whether the job market is continuing to stabilize, a necessary step to a strong recovery.
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They got what they wanted, as the Fed said "the Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Investors were looking for that phrase "extended period." They got it, and markets rallied after the Fed released the text of its decision. The Dow was up by about 150 points right after the Fed's decision, but it fell off those highs and closed slightly higher.
On the day, the Dow closed up by 0.3 percent to 9,802. The S&P 500 was basically unchanged, closing at 1,047. And the Nasdaq fell slightly, closing at 2,056.
Financial shares plunged, causing the positive reaction to the Fed's statement to evaporate. Shares of companies like JPMorgan Chase, Wells Fargo, and Citigroup were off by as much as three percent after news that the House would move up the effective date of credit card regulations. And the carnage in the insurance sector was even worse.
Shares of AIG and Genworth Financial dropped by more than seven percent. And shares of Hartford Financial Group were off by more than five percent.
Still, the news wasn't all bad. In the release from the Fed announcing its decision to keep interest rates low, the Fed said "economic activity has continued to pick up." They added that "the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth."
Now that investors received good news from the Fed, they'll be looking at the initial unemployment claims number and the October payrolls numbers. These will help indicate whether the job market is continuing to stabilize, a necessary step to a strong recovery.
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