Stocks closed higher as the Federal Reserve stayed the course, keeping interest rates unchanged and tapering its monthly asset purchases by another $US10 billion per month.
First, the scoreboard:
- Dow: 16,906.62, +98.1, +0.6%
- S&P 500: 1,956.98, +15, +0.8%
- Nasdaq: 4,362.84, +25.6, +0.6%
And now, the top stories of the day:
- The Federal Reserve made its latest monetary policy announcement, keeping benchmark interest rates unchanged and tapering its monthly asset purchases by $US10 billion. The Fed also announced its latest Summary of Economic Projections, and the central bank cut its 2014 GDP forecast and issued a new “Dot Plot.”
- The Fed’s latest “Dot Plot,” a projection of where FOMC members believe interest rates will be at the end of the year, showed the Fed had a wider dispersion of views on where interest will be in the future. Following the Fed’s latest Dot Plot, Chris Rupkey, Chief Financial Economist at Bank of Tokyo-Mitsubishi-UFJ said, “Net net, the economy is picking up the pace and following the dots its looks like interest rates are going higher and the timing of the first hike will be sooner.”
- Overall, Janet Yellen maintained her dovish posture during her press conference that accompanied the policy announcement, as noted by BI’s Joe Weisenthal. Yellen called recent inflation data “noise,” and expressed scepticism that the official headline unemployment rate, currently at 6.3%, is an adequate reflection of the labour market. In contrast to her Bank of England peer Mark Carney, who last week surprised markets with his comments about rate hikes, Yellen threw the market no curveballs.
- Amazon announced its first smartphone, the Fire Phone. The phone will only be available to AT&T customers and starts at $US199 on a two-year contract and comes in a 4.7 inch screen size. The phone’s camera will also support 3-D effects, as had been rumoured ahead of the launch.
- FedEx reported better than expected earnings and revenue, and shares of the shipping giant gained more than 6%. FedEx lowered its 2014 GDP outlook, citing severe weather, but boosted its 2015 forecast.
- Argentina said it will negotiate with hedge funds that are suing the country for the $US1.7 billion. Argentina had previously said it would not pay the group, which the country had previously called “vultures.”