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Stocks are falling
Stocks are falling following the Federal Reserve's decision to leave its benchmark interest rate unchanged.
(Investing.com)
This happened right after the news crossed.
Trading was quite volatile after the announcement, and the three major indexes gained more than 1%, with the Dow rising as many as 180 points.
The Fed decided to keep its benchmark rate pegged at 0%-0.25%, prolonging an era of near-zero interest rates; the Fed last raised rates nine years ago.
The "Dot Plot", which summarizes the Fed's projections for interest rates, reflected more dovish expectations compared to the one released in June. And, the Fed raised its expectation for 2015 GDP to 2.0%-2.3% from 1.8%-2.0%.
Fed chair Janet Yellen is holding a press conference and we are covering it here.
Stocks had traded in a tight range for most of the session ahead of the announcement, and ahead of the announcement, today ranked fourth for the year, according to portfolio manager Ryan Detrick.
Here's what the quick reaction was like in other markets:
Treasuries rallied, and the yield on the 10-year note slid to as low as 2.24%. The yield on the two-year note, which, as we highlighted, moves in tandem with interest rate expectations, slid more than seven basis points to as low as 0.72%. The yield rallied to a four-year high this week, a signal that the bond market had readied for higher rates. However, in the few minutes before the Fed's decision, the two-year yield plunged.
The dollar index fell to as low as 94.77, the lowest level in three weeks.
Gold gained more than $8 an ounce to as high as $1,131.20, the highest since early September.
The Chicago Board of Exchange's Volatility Index, or Vix, which measures expectations for future volatility in the S&P 500, fell more than 10%.
Ahead of the release, Dario Perkins at LombardStreet Research wrote in a client note that the key thing for the Fed and markets was to avoid a surprise.
"Given how jittery markets have been in 2015, there is clearly a strong case for avoiding nasty surprises," he wrote. "A rise of 25bps isn’t a big deal, but it depends how investors interpret it. In principle, a carefully worded FOMC statement should be able to limit the damage."
We got some other economic data this morning. Initial jobless claims fell 11,000 to 264,000 last week, the lowest in two months. Housing starts fell 3% at an annualized pace of 1.126 million in August, less than expected, while building permits totaled 1.17 million.
This post is being updated, more to come ...
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