A dovish dose of the Fed was just what the stock market needed today.
Agence France-Presse/Getty Images The S&P 500 soared 1.8% to 1,968.89, while the Dow Jones Industrial Average jumped 274.83 points, or 1.6%, to 16,994.22. The Nasdaq Composite climbed 1.9% to 4,468.59 and the small-company Russell 2000 rallied 1.9% to 1,097.12. Stocks were down earlier today.
Boosting the market this afternoon: The minutes from the last Fed meeting, which show those in favor of easy money still in control. The Lindsey Group’s Peter Boockvar explains:
Bottom line, there are a lot of differing opinions in the minutes and we can all take out what suits us but markets love any hint that the doves are in control and they certainly got that continued sense within the minutes. But, the unemployment data continues to work against those who want to keep rates at zero as since these minutes, the unemployment rate fell again to 5.9% (now at their year end target), the participation rate fell again (decline not cyclical but structural) and there was another big increase in the amount of job openings.
Whether this is the beginning of the next leg higher or just a bounce before further pain will depend on the economic data, write ISI Group’s Dennis DeBusschere:
Seems like a short term positive for market as [the Fed] agreed they would begin raising interest rates only when measures of the economy’s health and inflation signaled the time was right. They also mentioned global weakness and strong USD. As we noted in an FYI earlier today, given the growth worries of late, anything on the easier policy side from the Fed could help stem the USD advance and help risk assets bounce short term. That being said, it is important that growth improves, inflation expectations move higher and cyclical factors lead the market higher on any bounce or it will likely be a fade.
And isn’t that what the Fed has been saying all along?
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