Investing.com - U.S. stocks rallied on Wednesday after the
minutes from the Federal Reserve's March policy meeting revealed
monetary authorities unanimously agreed to ditch a target it was
preparing to use to raise interest rates.
At the close of U.S. trading, the Dow 30 rose 1.11%, the S&P
500 index rose 1.09%, while the Nasdaq index rose 1.72%.
The Federal Reserve Board of Governors unanimously voted to
scrap a threshold at which interest rates would rise once the
unemployment rate hits 6.5%, according to the minutes of the Fed's
March policy meeting.
In the past, the Fed had indicated rates could rise when the
unemployment rate hits or approaches 6.5% provided that figure
accompanied a 2.5% inflation rate.
Today, the headline unemployment rate stands at 6.7%, not far
from the previous threshold, though inflation remains well below
2.5%, prompting the Federal Reserve to do away with its rate-hike
target, which drew applause from Wall Street by allaying fears
borrowing costs would rise while the economy still remained
"Participants agreed that the existing forward guidance, with
its reference to a 6.5% threshold for the unemployment rate, was
becoming outdated as the unemployment rate continued its expected
gradual decline," the minutes read.
"Most participants felt that the quantitative thresholds had
been very useful in communicating policy intentions when employment
was far from mandate-consistent levels, but, with the economy
having moved appreciably closer to maximum employment, the forward
guidance should emphasize that the Committee is focusing more on a
broader set of economic indicators."
Stocks shot up on the news, as Fed Chair Janet Yellen has said
that policy must remain accommodative for some time to come.
The March policy meeting minutes reflected that stance.
"With respect to forward guidance about the federal funds rate,
all members judged that, as the unemployment rate was likely to
fall below 6.5% before long, it was appropriate to replace the
existing quantitative thresholds at this meeting," the minutes
"Almost all members judged that the new language should be
qualitative in nature and should indicate that, in determining how
long to maintain the current 0 to 0.25% target range for the
federal funds rate, the Committee would assess progress, both
realized and expected, toward its objectives of maximum employment
and 2% inflation."
Leading Dow Jones Industrial Average performers included Merck
& Company Inc (NYSE:MRK), up 3.77%, American Express Company
(NYSE:AXP), up 2.57%, and Visa Inc (NYSE:V), up 2.32%.
The Dow Jones Industrial Average's worst performers included
AT&T Inc (NYSE:T), down 1.01%, Verizon Communications Inc
(NYSE:VZ), down 0.49%, and Wal-Mart Stores Inc (NYSE:WMT), down
European indices, meanwhile, finished higher.
After the close of European trade, the DJ Euro Stoxx 50 rose
0.10%, France's CAC 40 rose 0.40%, while Germany's DAX rose 0.16%.
Meanwhile, in the U.K. the FTSE 100 rose 0.68%.
On Thursday, the U.S. Labor Department is to release its weekly
report on initial jobless claims.
offers an extensive set of professional tools for the financial
Read more News on Investing.com and download the new
Investing.com Stocks & Forex App