Fed signals it has no plans to raise rates


The Fed's key rate influences many loan rates for businesses and consumers, including mortgages. That language had roiled markets amid signs of slower global growth. Benchmark U.S. Treasury yields, which tend to set the bar for global borrowing costs, had dived significantly and Europe's big move saw Italian 2-year yields hit their lowest since May.

"There was a severe lack of trust in the Fed a month ago, and that has been relieved", said Craig Callahan, Chief Executive Officer of Icon Advisors in Denver.

"The Fed refilled the punch bowl and the party goes on". And it's good news for investors in risk assets.

While the Fed said continued USA economic and job growth were still "the most likely outcomes", it removed language from its December policy statement that risks to the outlook were "roughly balanced" and struck language that projected "some further" rate hikes would be appropriate in 2019.

At 2:18 pm in NY, the Dow Jones Industrial Average was down 0.22 per cent at 24,958.58 points, while the S&P 500 had gained 0.72 per cent to 2,700.5.

The Philadelphia Semiconductor index rose about 1.64 percent, while the S&P technology index gained 2.00 percent.

Upbeat results from Boeing and Apple late on Tuesday provided investors early relief. Boeing also indicated it had overcome supplier delays that snarled 737 production previous year.

Oil prices rose, paring gains of more than 1 percent, as the potential for supply disruptions following USA sanctions on Venezuela's oil industry lifted prices.

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The pound gained after losses Tuesday when lawmakers voted against a key proposal that sought to rule out the prospect of the United Kingdom crashing out of the European Union without a deal.

Advanced Micro Devices Inc jumped 15.6 percent after the chipmaker reported record quarterly growth in data center sales and projected 2019 revenue above Wall Street estimates.

The dollar also fell sharply after the release, with the euro at $1.1471 compared with $1.1421 just before the statement.

"The vote is not fundamentally changing the way the market's talking about Brexit", said Hetal Mehta, Legal & General Investment Management senior European economist.

Taken together, the balance sheet announcement and the shift on rate hikes was meant to convey maximum flexibility from a central bank buffeted in recent weeks by financial market volatility, signs of a global economic slowdown and a partial USA government shutdown that clouds the economy. But the monthly total was lower than the 271,000 jobs added in December. Against the yen, the dollar fell 0.33 percent to 109.02.

Oil rose above $54 a barrel as a government report showed a steep drop in imports from Saudi Arabia.

The March crude contract was up 92 cents USA at US$54.23 per barrel and the March natural gas contract was down 4.9 cents at US$2.85 per mmBTU.