2:46 p.m. The Dow Jones Industrial Average has cut its losses after the Federal Reserve left interest rates unchanged, and said it would taper the runoff of its balance sheet,
The Dow has dropped 12.10 points, or 0.1%, to 25,899.48, the S&P 500 has risen 0.3% to 2840.70, and the Nasdaq Composite has gained 0.6% to 7772.17. the Dow had been off around 200 points earlier today. The Fed left rates unchanged, while its dot plot signals no rate hikes in 2019. The Fed also said that the mortgage-backed securities on its balance sheet could be reinvested in Treasuries. “We got the Dovish Statement we were expecting.” writes NatAlliance Securities’ Andrew Brenner.
Or maybe even more dovish than the market had been expecting. “Those who thought it was impossible for the Fed to be even MORE dovish were disappointed as the FOMC lowered its 2019 dots from 2 hikes to zero,” writes BMO Capital Markets’ Ian Lyngen. “An impressive showing of ‘patience’ and with only one hike projected for 2020, we’re comfortable saying that 2.40% will be the terminal rate for this cycle even if the Fed is holding on to the dream of 2.
The 10-year Treasury has dropped to 2.5%, its lowest since Jan. 17, 2018. The difference between the three-month and 10-year Treasury yields is now just 6.446 basis points, and getting uncomfortably close to an inversion. The U.S. Dollar Index has dropped 0.4% to $96, while gold has gained 0.8% to $1316.70 an ounce.