Stocks Spike Higher In Reaction To Fed Statement - U.S. Commentary

(RTTNews) - After seeing moderate weakness for much of the session, stocks have spiked higher in recent trading on Wednesday in response to the Federal Reserve's monetary policy announcement. The major averages have jumped well off their lows and into positive territory.

Currently, the major averages are posting strong gains, near their new highs for the session. The Dow is up 161.70 points or 0.9 percent at 18,010.78, the Nasdaq is up 37.65 points or 0.8 percent at 4,975.09 and the S&P 500 is up 20.66 points or 1 percent at 2,094.94.

The substantial rebound by stocks comes as traders seem to view the Fed's statement as dovish regarding the outlook for interest rates.

As was widely expected, the statement no longer included the central bank's pledge to remain "patient" regarding normalizing monetary policy.

However, the Fed noted that economic growth has moderated somewhat and stressed that it remains unlikely to raise interest at its April meeting.

In her subsequent press conference, Fed Chair Janet Yellen noted that removing the word patient from the statement doesn't mean the central bank is going to be impatient.

The Fed also lowered its forecasts for GDP growth over the next three years as well as its outlook for both headline and core consumer price inflation.

Peter Boockvar, managing director at the Lindsey Group, said, "The stock market response is clear evidence again that easy money is what is continuing to drive things, not the economic fundamentals."

Gold stocks have shown a particularly strong move to the upside in response to the Fed statement, driving the NYSE Arca Gold Bugs Index up by 3.7 percent. The strength in the sector comes as the price of gold has spiked higher in electronic trading.

Energy, utilities, steel, and software stocks are also seeing significant strength, moving notably higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.6 percent, while Australia's All Ordinaries Index edged down by 0.1 percent.

The major European markets also ended the day mixed. While the German DAX Index fell by 0.5 percent, the U.K.'s FTSE 100 Index surged up by 1.6 percent and the French CAC 40 Index inched up by 0.1 percent.

In the bond market, treasuries have seen further upside in response to the Fed statement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 7.9 basis points at 1.979 percent.