U.S. stocks finished mostly lower in the wake of the Fed policy decision.
The Dow and broader U.S. stock market diverged on Wednesday after the Federal Reserve kept interest rates anchored near zero–and signaled they could stay there through 2023.
After rising more than 300 points, Dow Jones Industrial Average (DIA) pared gains, closing up 36.78 points, or 0.1%, to 28,032.38.
The broad S&P 400 Index (SPY) of large-cap stocks fell 0.5% to close at 3,385.49. Six of 11 primary sectors reported losses, with information technology leading the declines. On the opposite side of the ledger, energy stocks surged 4%.
A struggling tech sector weighed on the Nasdaq Composite Index (QQQ) on Wednesday. The tech-heavy benchmark closed down 1.3% to 11,050.47.
A measure of implied volatility known as the CBOE VIX (VXX) edged slightly lower on Wednesday but remained well above the historical mean. The so-called “investor fear index” bottomed at 24.84 on a scale of 1-100 where 20 represents the historical average. It would eventually settle up 1.9% at 26.08..
In monetary policy, the Federal Reserve announced Wednesday it would keep interest rates near zero “until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”
The latest Fed projections show that interest rates are likely to remain zero-bound until at least 2023.
The Final Word: With low-interest rates baked into the financial system, stocks could be heading even higher. The S&P 500, Dow Jones, and Nasdaq have rallied sharply off their March lows and could be headed for more gains in the fourth quarter.