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U.S. stocks jump after Fed keeps rates unchanged

Xinhua, September 22, 2016 Adjust font size:

U.S. stocks posted solid gains Wednesday as the U.S. Federal Reserve left its federal funds rate unchanged after the conclusion of its two day policy meeting.

The Dow Jones Industrial Average added 163.74 points, or 0.90 percent, to 18,293.70. The S&P 500 leapt 23.36 points, or 1.09 percent, to 2,163.12. The Nasdaq Composite Index increased 53.83 points, or 1.03 percent, to 5,295.18.

"The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," the Fed's policy-making committee said in a statement released after its two-day meeting.

The Fed's updated projections released Wednesday showed that policymakers expected the federal funds rate to rise to around 0.625 percent at the end of 2016, implying one rate hike this year, down from two estimated in June.

The Fed also said in the statement that near-term risks to the U.S. economic outlook "appear roughly balanced," a further sign that the central bank could raise rates by the end of this year.

"The FOMC (Federal Open Market Committee) thinks another rate hike is needed soon, but participants' thinking on the pace of tightening and ultimate level of rates when tightening is done continues to fall," said Chris Low, chief economist at FTN Financial, in a note.

The Fed will hold its next two policy meetings on Nov. 1-2 and Dec. 13-14.

Overseas, the Bank of Japan (BOJ) unveiled its new policy framework Wednesday, saying that it will keep its negative policy rate at minus 0.1 percent while modifying framework of its bond-buying program to guide long-term rate at around 0 percent.

The BOJ also said that it will continue to expand the monetary base until consumer prices exceed 2 percent in a stable way.

Tokyo shares bounced Wednesday after the BOJ announced its decision to modify the framework. The 225-issue Nikkei Stock Average surged 1.91 percent to 16,807.62.

European equities also rallied broadly Wednesday after the BOJ decision. German benchmark DAX index at Frankfurt Stock Exchange inched up 0.41 percent, while French benchmark index CAC 40 gained 0.48 percent. Endit