Bank stocks increased in afternoon trading Wednesday, Sept. 20, as the Federal Reserve's Open Market Committee decided to keep interest rates unchanged but begin unwinding its $4.5 trillion balance sheet in October.
Shares of JPMorgan Chase & Co. (JPM) traded up 0.88% to $94.77, while Goldman Sachs Group Inc. (GS) stock gained 0.46% to $229.99. Bank of America Corp. (BAC) stock was up 0.44% to $24.97, Morgan Stanley (MS) shares increased 0.27% to $47.80, Citigroup Inc. (C) stock added 0.91% to $71.80 and Wells Fargo & Co. (WFC) shares traded up 0.36% to $53.56.
Markets had priced in a near-zero chance that the Fed would change interest rates. At the same time, markets expected with near certainty that the Fed would begin trimming its $4.5 trillion balance sheet, which will have similar effects to a rate hike.
Fed funds futures are currently pricing in a nearly 61% chance of a 25-basis-point increase at the December meeting, putting the federal funds rate at 1.25% to 1.5%.
Shortly following the announcement from Fed Chairwoman Janet Yellen, the Dow Jones Industrial Average decreased slightly. The S&P 500 was down 0.11% and the Nasdaq dropped 0.38%.
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