Stocks turn volatile post-Fed decision.
U.S. stocks traded mixed Wednesday afternoon, as investors dissected the Federal Reserve’s latest policy decision.
All of Wall Street’s major indices turned lower in the final hours of trading before paring or reversing losses in the final hour. The Dow Jones Industrial Average (NYSEARCA:DIA) was down nearly 200 points before reversing losses to settle up 36.28 points, or 0.1%, at 27,147.08.
The broad S&P 500 Index (NYSEARCA:SPY) also reversed course to settle flat at 3,006.73. Most of the 11 primary sectors settled around break-even for the day.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) declined 0.1% to 8,177.39. It was down over 1% earlier.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) surged almost 10% in afternoon trading. It would eventually settle down 1.6% to 14.21 on a scale of 1-100 where 20 represents the historic average.
The Federal Reserve on Wednesday voted to lower its target for the federal funds rate to a range of 1.75% to 2.00% in a move that was widely anticipated by the markets. However, the decision wasn’t without some reservation, with two central bankers voting to keep interest rates on hold and one other seeking a 50 basis-point reduction.
“As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective,” read the official policy statement released at 2:00 p.m. ET.
The Final Word: In cutting interest rates on Wednesday, the Federal Reserve left the door open to another rate reduction in the near term. The central bank’s dot-plot summary of interest rate expectations is calling for another 25 basis-point reduction by December.