The Fed Gets Overshadowed

By Alex Eule |  Wednesday, December 16 Unstimulating. The Federal Reserve's days of moving markets may be over. For now, at least. The S&P 500 closed basically flat after the Fed finished its latest meeting and Chairman Jerome Powell spoke to reporters. The central bank said it would continue buying $80 billion worth of Treasury bonds each month and $40 billion of mortgage-backed securities "until substantial further progress has been made toward the Committee’s maximum employment and price stability goals." There was no change to its target federal-funds rate of zero to 0.25%. The Fed noted that "economic activity and employment have continued to recover but remain well below their levels at the beginning of the year." It continues to seek "maximum employment and inflation at the rate of 2 percent over the longer term." With inflation below 2% currently, the Fed re-emphasized that it's actually targeting a higher inflation rate in the short-term. Its continued accommodative monetary policies could eventually get it there.  While dovish Fed news generally boost stocks, investors have other things on their minds these days, including a still much-awaited stimulus plan from Congress. Investors are now expecting congressional leaders to agree on a relief package worth $900 billion.  As he has for several months now, Powell reminded investors that the Fed's powers are limited, urging more action from Congress:  Elected officials have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources. The fiscal policy actions that have been taken thus far have made a critical difference to families, businesses, and communities across the country. Even so, the current economic downturn is the most severe of our lifetimes. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year, and it may take continued support from both monetary and fiscal policy to achieve that. My colleague Alexandra Scaggs has more on the Fed's meeting on Barrons.com.

 

DJIA: -0.15% to 30,154.54 S&P 500: +0.18% to 3,701.17 Nasdaq: +0.50% to 12,658.19 The Hot Stock: American Income REIT +5.0% The Biggest Loser: Dish Network -11.7% Best Sector: Technology +0.7% Worst Sector: Utilties -1.2%