That news was initially welcomed by the markets.
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“This lack of confidence and clarity about [the Fed’s] own economic position is unsettling for market participants, and is likely to keep risky assets volatile”, said Franck Dixmier, global head of fixed income at Allianz Global Investors, ALIZF 0.49 % which has about €412 billion under management. “What struck me about [the Fed’s statement] was the reference to what was going on globally”.
Currently, the Nasdaq is posting a modest gain, up 7.48 points or 0.2% at 4,896.72, while the Dow and the S&P 500 are almost flat.
All 10 major S&P sectors ended lower, with the energy index’s .SPNY 2.6-percent fall leading the decline on falling oil prices.
About 35 minutes into trade, the Dow Jones Industrial Average was at 16,737.44, down 2.51 points (0.01 percent).
Banking stocks continue to reel in the wake of the Fed decision as hopes that higher rates would translate to fatter profits on loans have been dashed.
The S&P 500 index is down 3.02 points, or 0.2 percent. It’s still up 2% this year.
More than 10.5 billion shares changed hands on Friday, the third-largest volume day of the year.
Future contracts pointed to a slight rebound on Friday.
Trading on Wall Street was still mostly range bound, however, as investors avoided big bets before the Federal Reserve’s much-anticipated rate decision due on Thursday afternoon.
“When you add up the Fed, China, the cloudy earnings outlook and, and possibly of government shutdown, it’s not a surprise that the market has had a defensive reaction”, Emanuel said. But as the day wore on, investors decided to pay more attention to the reason why it left rates unchanged.
“Clearly the Fed was anxious about developments overseas and that was, at first blush, the primary reason why rates were not raised this month”, said Dan Greenhaus, chief strategist at BTIG in emailed comments. The pullback comes amid a modest drop by the price of gold.
Global economic risks and about inflationary pressure prompted the Fed to push back its plans to raise interest rates. But some had been anxious about a return to normal after years of rock-bottom rates. Germany’s DAX was down 2.8%, France’s CAC-40 declined 2.4% and London’s FTSE 100 lost 1.4%.
The benchmark stock indices in Canada and the United States opened significantly lower on Friday, following significant drops in European markets. There are some expectations of an interest rate rise but I think they are diminishing somewhat.
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Fears about global growth eating into oil demand have only been amplified by the Fed decision. “That is really what the market is trying to cope with right now”.
