After the Federal Reserve’s decision to not raise interest rates on Wednesday, the NASDAQ hit a new record high on Thursday. The Fed’s decision once again shows a very cautious approach to economics. After strong job reports and manufacturing data, inflation continued to be below the FED’s 2% target, and indicated that there is still room for improvement. Jane Yellen did indicate that a rate hike is likely this year.
Ryan Larson, head of equity trading at RBC Global Asset Management said in a statement, “The Fed probably appeared less hawkish than what the markets had expected…I think the market continues to be focused on the Fed pushing a hike for later as a good thing rather than bad.”
Many economists disagree with the Fed’s decision. Phil Orlando, chief equity strategist at Federated Investors said, “The Federal Reserve did what we thought they should’ve done, which was nothing. The data were not supportive of a rate hike… So when the Fed said no rate hike’; the data does not support it, you saw a knee-jerk rally that the Fed got it right for once.”
On Wednesday the FED’s announcement the Dow Jones industrial average gained 163.74 points, 0.90%, to close at 18,293.7, the S&P 500 rose 23.36 points, 1.09%, to end at 2,163.12, and the Nasdaq jumped 53.83 points, 1.03 %, to close at 5,295.18. Thursday stocks continued to rally.