US stocks recover after Fed says rates won’t increase
American stocks gained momentum and markets improved as investors anticipate that the Federal Reserve will continue with low interest rates. The Dow closed today just shy of a record.
The US central bank stated that it is not planning on raising rates for a “considerable time.”
Over the past couple of weeks investors were very wary and the market was unstable because of uncertainty about the possible outcome of the Fed meeting.
However, now that the central bank has indicated that it won’t increase rates, U.S. stocks have rallied.
Before news that the Fed wouldn’t be increasing rates the market was adjusting to the possibility of higher rates, with a bearish outlook on Treasury bonds and Real Estate Investment Trusts.
The prices of these assets have increased in value in wake of the fact that there will be no increase in rates by the Fed.
A bullish US market
The Dow Jones Industrial Average (DJIA) increased by 0.6% (100.83 points) to 17131.97, which was only 0.1% lower than the record high of 17138.20 (on July 16).
The Nasdaq Composite Index increased by 0.7% (33.86 points) to 4552.76.
The S&P 500 went up by 0.7% (14.85 points) to 1998.98.
European markets fell
European markets went down because of the uncertainty regarding the outcome and implications of the Scottish referendum on independence this week.
The Stoxx Europe 600 Index dropped by 0.3%. The German economic outlook took a dive too because of the current eurozone economic conditions and the Russian sanctions.