As expected, the Fed did not raise interest rates today. Also, as expected, the Fed dialed down their expectations for rate hikes in 2016. Going into the year the Fed had expressed the notion that four rate hikes were likely for calendar year 2016, but today via the wonderful dot plots the Fed is now indicating that there likely will only be two rate hikes in 2016. Yes, the FOMC seemed pleased that things have settled some in the past few weeks, but remain concerned that inflation is still too low and that the global economic situation is still tenuous, at best. Thus the glide path to higher rates looks to be a bit slower moving forward.
As for stocks, well you guessed it. Accommodation was met with enthusiasm (as we have seen for years) and stocks moved higher into the close of trading. For the day, the Dow Jones Industrial Average was up 74 points to close at 17,325. The S&P 500 was up 11 points to finish the day at 2,027. Gold was up $30 to trade at $1,261 per ounce, while oil was up $2.12 to trade at $38.46 per barrel WTI.
Yes, stocks and commodities celebrated the Fed decision and statement, still seemingly tied to the Pavlovian type of response we have come to expect. Of course, the Fed backing off does indicate a more doubtful view of the economy by the nation’s central bank. Nevertheless, the bulls stepped up today, while the bears backed off. Let’s see if the bulls remain emboldened, or will they begin to question their enthusiasm? Stay tuned.
Have a nice evening everyone.