Fed Keeps Rates Near Zero
WASHINGTON ( TheStreet) -- As expected, the Federal Reserve's policy-making arm left its target fed funds rate unchanged and maintained language suggesting that economic conditions would continue to "warrant exceptionally low levels for the federal funds rate for an extended period" on Tuesday.
Although much of Tuesday's review of economic conditions resembled the Committee's previous assessment in August, it did pave the way for the future implementation of additional quantitative easing, saying that the Committee is "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." That compares with the FOMC's vague promise in August to monitor conditions and use its policy tools accordingly.
Stocks, which had been trading slightly below the flatline throughout Tuesday's session, moved higher following the Fed's release. The Dow Jones Industrial Average was adding 47 points, or 0.4%, to 10,801 and the S&P 500 was gaining 2 points, or 0.2%, to 1145. The Nasdaq was also trading higher, by 4 points, or 0.2%, at 2360.
"I expected the Fed statement to have a positive effect on markets and it did," said Commonfund Chief Economist Michael Strauss, adding that bond investors may have been disappointed that the Fed didn't implement more aggressive action."Equities are rallying and most investors are underinvested in equities. This may be just the push they needed," he said. Meanwhile, yields on Treasuries weakened. Prices on the benchmark 10-year Treasury rose 30/32, diluting the yield to 2.596%. The
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV