Fed in No Rush to Raise Rates, Market Rallies as a Result

After weeks of speculation and nervousness about an interest rate hike, the Federal Reserve confirmed today that an increase is likely. However, the market gushed over the fact that the Fed would take its time in raising rates — and stocks rallied as a result. The Dow Jones Industrial Average closed up 1.27 percent to 18,076.19 and the S&P 500 inched up 1.21 percent to close at 2,099.42 while the WWD Global Stock Tracker rose 0.58 percent to 115.60. Of the 100 companies in the tracker, 69 stocks advanced, 30 declined and one remained unchanged. The Fed noted that decelerating inflation and a stronger labor market reflected some strength in the economy, but things could be better — especially when considering the impact of a strong dollar on U.S. exports. Analysts and investors walked away from the Fed announcement thinking that rates may not go up until September. Meanwhile, a pullback in U.S. equities by global investors is expected to continue. In a survey by Bank of America Merrill Lynch, global fund managers said they’ve “significantly pared back U.S. equity allocations” due to an expected rate hike. The survey reported that a net “19 percent of global asset allocators are now underweight U.S.

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